The point of tipping

I’ve seen So-and-So with another man’s wife,

I’ve seen High Society eat with its knife,

I’ve heard the worst claret pronounced “nonpareil,”

I’ve heard the best Roquefort condemned for its “smell”. . . .

I’ve bowed and obeyed, and I’ve always agreed

My business to serve is, and not to take heed;

A quarter will cause me to doubt my own mind,

And after a half I am deaf, dumb, and blind.

A poem in the voice of a waiter from the turn of the last century

 _______

Tipping is a confusing, and paradoxical behaviour. We tip some people who provide services but not others. In the U.S. 31 different service professions are tipped, whereas In Japan this figure is four, and in Iceland it is zero. In Japan tipping is seen as an insult. It is assumed that we tip in order to encourage good service but we leave one only after the service has been given, when it is too late to change it, often to people who will never serve us again. Why do we engage in this apparently illogical behaviour?

The majority of historians agree that tipping has its origins in an aristocratic custom which began in England early in the 17th century. On departing visitors were expected to leave an amount of money, known as a vail, to the servants. This practice then spread to coffee houses, then to other service providers and it was eventually exported around the world.

What is less clear is the origin of the word. Loyal readers of my blog will know that I am sceptical of folk etymology. There are a number of words which are said to have begun as acronyms Examples of this dodgy lexicography include posh (Port Out Starboard Home), cop (Constable on Patrol),  golf (Gentlemen Only Ladies Forbidden) and shit (Ship High in Transit) and the classic fuck (Fornicating Under Consent of King). The origin of tip as being To Insure Promptness is surely another case of this. The Latin word stips, which means a gift, is one possible source.

If there is country where tipping is deeply engrained, it is surely the United States. One estimate, which is from a years ago is that Americans tip for the value of approximately $40 billion. To put this in context the budget for NASA is under $20 billion. The fact that tipping is so prevalent in the States is somewhat paradoxical. Many see it as un-American, an undemocratic throwback to Europe and its class-riven society. Indeed, there has always been opposition to the practice. In 1904 William R Scott formed the Anti-Tipping Society of America, whose members had to take an Alcoholics Anonymous-style pledge to not tip anyone for 12 months. In 1912 another organisation, the Society for the Prevention of Useless Giving, joined the fray. There were also polemics written. In “The Itching Palm: A Study of the Habit of Tipping in America”, Rufus Scott, railed against tipping and the aristocratic worldview it represented. It was what they had left Europe to escape from. These campaigns bore some fruit. In the 1910s Arkansas, Georgia, Iowa, Mississippi, South Carolina, Tennessee and Washington State all brought in bans on tipping. However they would all be repealed the following decade. The campaigners would surely be distressed to see the $40 billion spent just over a century later.

Among economists there seems to be a division of opinions. . In a competitive labour market increased income through tipping will in the long run be offset by lower base wages Many see it as wasteful activity. However, not all economists look at it that way.

One group, from the free-market Austrian school, argue that tipping is a market-based solution to a problem of imperfect knowledge. A estaurateur would find it extremely laborious to monitor his entire staff so that he would be able to tailor the wages of waiters and waitresses to their courtesy with customers. One solution is to allow the customers themselves to evaluate their servers’ performance. This not only saves the employer time and money, but allows for the satisfaction of what will surely be heterogeneous preferences among customers. They also posit that as customers (especially male ones) reward physically attractive staff with higher tips, tipping can be understood as a discreet way of channelling the most “appropriate” personnel into this line of work.

This kind of rule mentioned above about male clients rewarding physically attractive staff with higher tips is I suppose not surprising. Here are a few more empirical observations:

Men’s appearance, is not so important.

Waiters get better tips from women than men.

Waitresses get better tips from men than women.

Blondes get better tips than brunettes.

Slender women get better tips than heavier women.

Large breasted women get better tips than smaller breasted women.

Women in their 30s get better tips than either younger or older women.

All these findings come from the work of Michael Lynn who has written more than 50 papers on tipping behaviour. A former bartender, busboy, and waiter, Lynn is currently the Burton M. Sack Professor in Food & Beverage Management at the Cornell University’s School of Hotel Administration. His oeuvre includes:

Reach out and touch your customer.

Gratitude and gratuity: A meta-analysis of research on the service-tipping relationship.

National personality and tipping customs.

Sweetening the till: The use of candy to increase restaurant tipping.

Are Christian/religious people poor tippers?

Clothing colour and tipping: An attempted replication and extension.

Lynn has carried out extensive of research looking at the size of tip and how it relates to the customer’s perceptions of service quality. There is a consistent relationship; people do tip more the better the service they get. But this correlation is rather weak, a mere 0.2. This apparently means about 4% of the variability of the differences in the percentage tips left by different dining parties can be explained by their service ratings.

The professor has also found that the prevalence of tipping decreases as the percentage of national GDP collected in taxes increases. In high-tax Sweden you generally don’t have to leave anything. If you want, you can leave a small tip of 5-10%, or round up the amount of the bill. The idea is that everyone should have a decent wage and so tipping is an extra, not an essential component of the server’s salary.

The likelihood that tipping will vanish is remote. We value people’s esteem and we want to look good and receive a nice smile as we leave the restaurant. I’ll leave you with this classic scene from Reservoir Dogs about tipping:

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