Everybody loathes it, but everybody does it. A recent poll showed that 40％ of Americans hate the practice. It seems so arbitrary, after all. Why does a barman get a tip, but not a doctor who saves lives?
In America alone, tipping is now a ＄ 16 billion-a-year industry. Consumers acting rationally ought not to pay more than they have to for a given service. Tips should not exist. So why do they? The conventional wisdom is that tips both reward the efforts of good service and reduce uncomfortable feelings of inequality. The better the service, the bigger the tip.
Such explanations no doubt explain the purported origin of tipping-in the 16th century, boxes in English taverns carried the phrase “ To Insure Promptitude” (later just “ TIP” ).But according to new research from Cornell University,tipping no longer serves any useful function.
The paper analyses data from 2,547 groups dining at 20 different restaurants. The correlation between larger tips and better service was very weak: only a tiny part of the variability in the size of the tip had anything to do with the quality of service. Customers who rated a meal as “ excellent” still tipped anywhere between 8％ and 37％ of the meal price.
Tipping is better explained by culture than by economics. In America, the custom has become institutionalized: it is regarded as part of the accepted cost of a service. In a New York restaurant, failing to tip at least 15％ could well mean abuse from the waiter. Hairdressers can expect to get 15～ 20％ , the man who delivers your groceries ＄ 2. In Europe, tipping is less common; in many restaurants, discretionary tipping is being replaced by a standard service charge. In many Asian countries, tipping has never really caught on at all.
How to account for these national differences? Look no further than psychology. According to Michael Lynn, the Cornell paper's co-author, countries in which people are more extrovert, sociable or neurotic tend to tip more.Tipping relieves anxiety about being served by strangers. And, says Mr Lynn, “ in America, where people are outgoing and expressive, tipping is about social approval. If you tip badly, people think less of you. Tipping well is a chance to show off.” Icelanders, by contrast, do not usually tip--a measure of their introversion, no doubt.
While such explanations may be crude, the hard truth seems to be that tipping does not work. It does not benefit the customer. Nor, in the case of restaurants, does it actually incentivise the waiter, or help the restaurant manager to monitor and assess his staff. Service people should “ just be paid a decent wage” may actually make economic sense.