How do I add a column to dataframe on condition that certain observations in my dataframe contain a target word in Python?
You can use str.contains on the DataFrame:

df = pd.DataFrame({'Age' : pd.Series([35,42,87], index=[1,2,3]),
        'Famous_for': pd.Series(['businessman chairman of IBM (1973–1981)',
                                 'musician (House of Freaks Gutterball)',
                                 'baseball player (Oakland Athletics)'], 
        index=[1,2,3])
        })

df['entertaining'] = df['Famous_for'].str.contains('musician')
print (df)

   Age                               Famous_for entertaining
1   35  businessman chairman of IBM (1973–1981)        False
2   42    musician (House of Freaks Gutterball)         True
3   87      baseball player (Oakland Athletics)        False


Note that str.contains also accepts a regular expression, so if you wish to search for various words you might use

df['entertaining'] = df['Famous_for'].str.contains('musician|businessman')