Economist Emily Oster on how to make better decisions at work and in life

When you're a parent, there are so many big decisions to make, but also a lot of small decisions that may or may not have a big impact on your child's life. So when you ask a doctor if it's okay to maintain your four cups a day coffee addiction during pregnancy and their response is two cups should be okay, you might not feel like that's enough information to make one of many decisions coming your way. And that is exactly how Brown University economics professor Emily Osta felt during

So I think the big picture in economic decision making is the idea of weighing costs and benefits.

And that any choice that you make you should.

Make thoughtfully by thinking about what with the benefits of this choice being with the and what would the cast be. But I think it's also the case that under a lineying that there are a lot of smaller principles that can help us do that better. So one that I like a lot as an example, is opportunity costs is the idea that.

Effectively my time is valuable.

And that I should when I make choices about whether I should hire somebody to help me clean my house, I should be thinking about the opportunity costs of that time. I should be thinking about what else I could be doing with that time, and explicitly acknowledging that in some of the choices that I make.

Interesting So, how do you make decisions at work?

A lot of the decisions that I make at work have to do with how I'm going to prioritize different pieces of my professional life. So I do a fair amount of writing. I'm also an academic, so I write some academic papers, and then I do a fair amount

Right, And so like, what are some of the frameworks or tools from economics that you're consciously using or maybe unconsciously using now when I'm making those big pigure decisions.

Yeah, so I think it's almost all unconscious at this point. My parents were also economists, and so my kind of whole. My husband is an economy so it's all that sort of steeped in there. But I think a lot of this is this idea of trade offs, of kind of if you're doing this thing, you can't be doing this other thing, and so just recognizing the kind of weight

Activities not based on how important they.

Are overall on average, but thinking about what is the best use of this next hour. So there may be a situation in which you know there's one broad area of work or one broad project that's in aggregate much more important.

Than another one.

But when I think about how much progress would be made in the next hour, or what would be the best use of this next hour, it is best used on the smaller project or the sort of aggregate less valuable project, because the marginal.

Value of that hour is higher.

And so I think that's that actually ends up influencing a lot of how I organize my time in a smaller way.

Which is to say, I need to make every hour as productive as possible, and that means allocating them in this marginal way where it's what is the best use of that particular hour, given where I am on everything else, rather than saying all the time should be spent on this big project because it is on average most important.

Well, no, maybe the marginal hour is not as important.

Okay, interesting, I'm thinking of how would I apply that to my own life. At the moment, I've got my big project is I'm writing a book, and I'm on deadline. October is when I have to submit the first draft, and so that, like, I feel like that occupies every spare hour that I've got at the moment. But then I've got other tasks that I do, like writing articles, or doing knote speeches, or doing business development activities or

Yeah, so I think that I would encourage you to think about the kind of diminishing marginal value of time on your books. So, so I'm going to assume that you write books like I do, which means if you sat down at the beginning of an eight hour day to write that, the kind of first couple of hours, you've had your coffee, you're like, really, you're focused in, you're dialed in, You've thought in the.

Shower about what you're going to say. You're like, really, you're doing it.

And by our four things that are sort of decay, and by our a you're basically fried, like you can't or maybe by our four you're fried. That would be a begin me that's right, yeah, yeah, But there's a temptation to be like, okay, just because it is so important, I just got to push through, push through, push through, because this.

Is this is the big project.

But actually that fifth hour, like you're that fifth hour is not that productive, Like you're not getting that much done. And you might at that point be able to get more sort of total work life points, whatever it is, by spending some of that time on article writing or something different, or administrative tasks or catching up on email or whatever it is, because.

You're going to need to do that time sometime.

That's going to have to happen, and if you do it in that hour, that would otherwise be the sort of less least productive of the book hours. If you instead slot in something else, it may be that that's actually sort of an aggregate time saver or productivity saver, because you've optimally used the hours rather than just like digging your head into the thing that you know is the sort of average most important because of the sort of diminishing value of time on any given project.

In your latest book, The Family Firm, you lay out a framework for decision making called the floor ifs, and you apply it to parenting decisions, which I do want to talk about, but I want to start by asking with that framework, what are the other sorts of decisions that we can be applying that to.

I tend to find I think this is applicable and a wide variety of settings. So you know, the kind of four f framework has the idea that you're going to start by framing a question. Then you're going to collect some data, some evidence information I call that fact finding, that you will then make a final decision and then there will be some sort of period of follow up.

So let's get into this framework. Can you talk us through the four ifs?

Yeah, So that you want to imagine that you have a kind of big decision to make in some area of your life. And the first f is called frame the question. It may seem sort of fasciled to say you have to ask the question, but actually I think people are not always great at this. So we can take the should I get a new job question as an example. People often as well, you know, should should

Going to look like. And then there's the third step.

Which is a final decision step, which is to say, Okay, once you have all that information, you actually should just plan a time to sit down and make the decision.

Because I think we often let.

Big choices sort of parkolate and parcolate, and we think about them a little here and a little there, and kind of in the shower, and we talk to our partner about them a little bit, we talk again. You know, we only have three minutes. We're falling asleep, and we never get to the end because we haven't said, Okay, this is the end of this decision.

You know, I am am I going to switch jobs or not.

Here's the time at which I'm going to decide that I'm going to have a meeting or whatever it is and a final decision, and then we will have made the decision.

And we can kind of move forward. But then the last F is follow up.

Is just noting that, you know, we often for big decisions, we tend to think about them as like, Okay, I'm going to make this decision and then that's it. This decision will be forever. And of course, for some decisions that's true, but for many of the decisions that we make, it may not be forever. You may have the opportunity to re up that decision at some other time, and

I love that it makes decision making complex decision making sound like it could be much simpler. Now, could you maybe help me apply that framework to one decision that's

Okay, so let's start with so the question.

You've framed the question as do we go to market now or do we wait for this for this guy? And so I think one's those are concrete choices.

That's good.

I think the one thing that I would add to your first question asking is to note that you may have to go to market in both of these situations. So option one is go to market now. Option two is wait, with some probability to hire this person that you like, and with some probability have to do this market thing in December?

Is that right?

Yes? Exactly?

Okay, all right, so you got these new choice Yeah.

And ideally we donate someone now that there is this good person that's six months away, which is why it's so tricky.

Okay.

So it seems to me like the most important information you need is, like, is some version of how you know how expensive? You know how costly it is to go to the market, you know how much time that's going to take. Presumably, Yes, it seems like the key piece of information is how likely this person is to be interested and how unusual they are? Hmmm yes, yeah, So I don't know if there's a way, like I think what I would say is in whatever is this sort of second phase of this, I think that those are.

Two things that you would ideally learn.

It sounds like you could probably learn something about how likely they are. I mean they're going to overstate their likelihood, yes, but you know you can bias it down. Yeah. And then and then this question of like, I like, do you know enough to know if this person is is really unusual or maybe is there a way to dip in just a little to see, you know, is there somebody Uh is this likely? Maybe this person isn't the unicorn that you think that they're Hmm.

Yeah, there are. They're really good questions to ask, and I think that's so true. Like if we with the first question in terms of how interested is this person, they're definitely going to overstate that they're definitely interested. But also that earlier on in the career, so they could, you know, quite foreseeably be lord to go to another firm. So that's a tricky one. In terms of how unique

Yeah, and I think then the thing is like just to dig into whether there's a fast way.

To learn to learn more than what you know.

So if my husband were here, because he likes to put people on the spot. He would say, why don't you tell this person, they like, ask this person to sign something, just because when people sign that, and it probably isn't going to be something binding because of course you know, there's no like you could always get out of things, but that people don't like to do that unless they're serious.

They feel like it's uh.

It's and if you come and you say, hey, can you sign this early commitment and they say no, I think that's a pretty bad sign. It is, yes, but I think that the sort of Okay, so there's like some things you need to.

I think that you could go learn.

And I guess the sort of last piece of this is to say, the longer you wait on doing this, in some sense, the worse it is, or the like you could just wait and wait and wait and now make this decision and then find out that the person doesn't want it, and then you've sort of spent your six your six months kind of on not on purpose. So I would say, try to find these things out now and say, okay, in two weeks we're going to.

Either pull the trigger on this thing or decide to wait.

Okay, That is very helpful Emily will be back soon talking about why she makes her most important decisions with her husband using it email. But before we head to that, I wanted to say, if you are not connected with me on the social media channels, then you might want to do that because I share a lot of content

When I came into the parenting space when I was first pregnant with my daughter, I found there was sort of like two classes of books. There were the books that were just like, here is what happens during pregnancy, which we were useful but tended to make the same kinds of blanket pronouncements that my obi, my doctor was making around the rule, the pregnancy rules as we as

It was just like, well, I'm an expert.

It's fine to have a cup of coffee, uh, and and that was not.

Sufficient for me.

And something else I was curious about because doctors have access to data, but for you, as an economist, you can often get to like a different insight with the data. Can you tell me how how I guess an economist can look data and how you can end up with something different from what the medical profession is saying.

So I think, you know, first of all, it's sort of worth noting that actually, in a lot of cases I wasn't saying necessarily something different, and some of this was just interpreting for people why they were being told what they were being told. But I think, you know, there are places where I differed, obviously, and I think some of that is, you know, my training is really in how we learn causality from data, how we figure out, you know, is the relationship between this variable and this

One is causing the other one.

So I spent all of my professional life doing that, and so when I go and read some of these papers, in some cases I have a pretty different sense of what are the good papers and what are the less good papers, because I I kind of dug into what is the sort of evidence underlying this?

And doctors have a lot.

Of kinds of training, but actually they don't have a lot of training and statistics. And so the training that I had as an economist actually in many ways much better suited for those kinds of analyzes than the training that you would get in medical school.

Now, i'd love to hear about some of the decisions that you've made as a parent for your kids and I'd love it if he could talk me through maybe one of the top of decisions to make and your process to making that decision.

One kind of big decision that we made a few years ago surrounded my what to do about school for my for my youngest. So so he was in like a preschool daycare environment that he that he liked a lot, that we liked a lot, but there was an opportunity to move him sort of because he had gotten to be the right age into.

The school with our that our daughter was in.

And it wasn't a super easy choice because you know, he was very happy. So we sort of approach that and kind of more or less this way, so asking the question, which in that case amounted to should we leave him in this school for another two years and then move him or should we move him now? And that like already was actually I think until we had talked about it was not. We hadn't fully recognized the

You know, And then we spent a bunch of time.

Visiting the two options, trying to figure out which teachers would be in different places, and were there any changes that had happened to the curriculum since their daughter had been in there, and just really trying to understand what

A decision that I know that I'm going to have to make for my daughter is where to send her to high school? And she's at a primary school at the moment. And I will add that, you know, I do have an ex husband that we will have to make the decision together. But she's in grade two at the moment in primary school, and the decision is four years away. But I feel like those four years are

Other than this sort of like think about the options.

Get you know, I think the biggest piece of advice there is, I think thinking carefully in advance about how involved you want her to be in the decision. So I think one of the thing that's hard about this stage of parenting is figuring out which pieces of these choices do we want to give our kids kind of autonomy or participation rights into.

Right. So maybe that.

It may not be that you want to give her all of the options right.

You may not want to say, okay, like pick the high school.

I don't exactly know how your schooling system works, but it may not be that you want to say, pick from all of the possible high schools, because actually you may not think that they're all acceptable, or they may all be affordable, or they may not all work for some other for some other reason. But at the same time, you know, with a with an older kid, you probably don't want to just say, Okay, here's what you're doing,

Now I've had that when you're talking about like different matters relating to your kids, you will do quite a bit of amail discussion with your husband, Is that right?

That is right?

Yeah, we do a lot of our interaction over email.

I love a good email.

Can you tell me why you decide to do that via email then some other communication channel like face to face at the dinner table.

Well, first of all, the kids are at the dinner table.

See you forget about that, but I yeah, so I think that that that we.

Try pretty hard to do.

Yes, to do much of this interaction over email, And I think part of you know, or over some like to get even more extreme, like in an assana task to grow over something like that. And I think that the reason is that that you can be much more direct and concrete and understanding is just much clearer when it is written down and it sets expectations in a way that everybody can like can see what is written, can see what we agreed on, can sort of like

So give you an example, there was like.

A period of time when one of my kids had a tick on them, like it's like a bug and tick on them, and there's like a question about there's a concern about buying disease where I live, which is a thing that you can get if you have a tick bite. And we had to have a discussion about whether we wanted to like pre treat him with antibiotics for this. And that is a place where like having the interaction about the about that question over email is very productive because I can say here are the facts.

Over the breakfast table.

Here's the question I still have and me being like, Okay, let me try to remember, like look at that later and then get back to you about it. I can just like see the email, put it aside when I have time, come back.

To it, send it back to him.

And it's sort of like so sometimes I say, like, your computer doesn't get tired of remembering things even though you do, and so you've got to give your computer a little mental load.

Is there anything else that you do, like because of your background that helps you like in work all life that other people would go, oh, that's really quirky.

So we have a lot of these same kinds of interactions with our kids where we will sort of interact over email with them. And the other day so I noticed that they were emailing each other, and you know, there's like six and ten. It's like the son opened up his computer and he was like emailing with he like emailed like I hope you have a good evening.

I mean, I don't even.

Know where they come up with this, where they come up with this stuff, but I think we do, you know, sort of lean into the idea that lant kind of everybody in the in the household can engage in this kind of slightly structured decision making decision making piece. I guess the other thing I do that people that is probably a much more typical thing is that I get up really early in the morning before anybody else is up.

I've always really liked that time because.

It's good, like sort of deep focused time if I have some deep focused thing that I need to do. But it's also it feels like it's mine in a way that you know, most of the rest of the day and it doesn't.

So most of the rest of my day sort of feels like it's it's meetings or it's the kids or and I.

Love those things, but it's it's not like my time to do whatever I want with. It's not like free free moments, and that early morning time kind of is free.

I've heard that you describe yourself as an aggressive multitask AUP is like, what are you doing in terms of aggressively multitasking, like where you feel like it's serving you.

So I think the biggest thing is like how I address email, which is that like I try not to let it build up, and so I try if I have, like if a meeting ends five minutes early, I try to like triage what I've got in my email so I don't end up at the end of the day with like a billion things left over because it just.

Like it drives me. It drives me crazy.

Emily, My final question for you is for people that want to read and consume more of what you're doing, what is the best way for people to do that.

So I have a newsletter on substack, which is probably the easiest way to read the stuff that I'm doing. It's called parent Data, but it's just emii astro Do at substack dot com. And the new book I think will be out in I think I think is out in Australia at the same time as it is in the US, sin certainly in the UK, which is August third. And those are the best ways to find me fantastic and I highly recommend the family Firm those that are parents.

Very very challenging. So Emily, it's been awesome chatting to you. I'd so appreciate your time and your advice, and I'm now going to go speak to my CEO about what to do about this recruitment decision as well.

Good luck with that, and thank you so much for having me on.

That is it for today's show. Now, if you have not hit subscribe or follow where you're listening to this podcast from, you might want to do that because next week I have comedian Michelle Laurie on the show talking about all sorts of things, including why you need to let other people go first. So hit subscribe or follow wherever you're listening to this from. How I Work is produced by Inventium with production support from Dead Set Studios.