Heavy Lifting - thoughts and web finds by an economist
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Thursday, July 29, 2004

Why do you tip on a trip?

Economists have long puzzled over the propensity for tipping waitresses and waiters. Is the tip a recognition of high quality service, a means of establishing your reputation for future service, or is it a social norm that has little to do with the quality of the service that you receive? In the end, tips are not required and are paid after services are rendered, so they are not required to elicit (good) service. Finally, voluntarily contributing to someone else's bank account seems a bit odd.

Most studies have concluded that the tip sends a signal that you will reward good service (here is a recent paper on tipping). A good tip today ensures good service tomorrow. But why tip when you will never be in the same town again, i.e. you are a transient? What reputational costs are there in this case?

If you are on a road trip and you choose not to tip, you might end up in this database of bad tippers. I am not sure how waitresses would know from this database that you are a bad tipper, waitresses don't know your name before they serve you, so the reputational costs must come from your friends and family knowing that you are a cheapskate.

My last name is not in the database - whew.

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