The Strange Secret Rules of Tipping
The Christmas season officially ended in my neighborhood last week. The formal signal arrived in the form of trash cans strewn across the driveway when I arrived home from work. In the weeks leading up to the holiday, the sanitation workers take care to stand the cans straight and tightly lidded. For the two or three collection days afterward, they do the same. Then the clutter resumes.
The reason they take pains to set the cans out neatly is, of course, the hope of earning a larger Christmas gift. The season is marked by the distribution of gifts -- essentially tips -- to people who provide services. Many families will leave money for their letter carrier, and, for those who still take the physical newspaper, the person who delivers it.
But what sticks in my mind is those trash cans, and the delicate minuet between homeowner and sanitation worker, in which each side understands the rules of the implicit exchange: so much additional service leads to so much additional in the Christmas envelope.
Why exactly do we behave this way? After all, both parties know that eventually the time will come when the cans block the driveway once more. So it isn’t as though the gift, unless it’s extremely handsome, is likely to purchase a year’s worth of improved service.
Here the most useful analogue is tipping in restaurants. There is something of an economic mystery to how and why we tip. At the most basic level of exchange, one can see the tip as purchasing improved service. The better the waiter or waitress, the higher the tip.
But unless the tipper is a regular customer, the staff has no real way of judging whether better service will bring a higher tip. And given that the tip is determined only at the end of the meal, a one-time customer has no way to earn better service at the next visit by tipping well at the end of this one.
Moreover, the data seem not to support the hypothesis that tipping is correlated with quality of service. A more prominent theory is that tipping is a social norm, and people who fail to tip, or believe they have tipped too little, suffer a disutility from feeling embarrassed or guilty.
But it’s easy to see that a social norm under which tipping is thought obligatory leads to problems. One would expect more tip jars to show up, in business of different kinds, and in fact they do. I’ve spotted them at newsstands in the railroad station. Not long ago I was in an antiquarian bookstore, and when I made my purchase the credit card slip came back with a line on which I could add a tip.
The economist Tyler Cowen has noted that the seeming ubiquity of tipping presents something of a puzzle: “As new tipping opportunities spread, uncertainty about the true social defaults increases (‘hmm…maybe coffee servers do deserve a tip…’).” As a result, more people who would prefer not to tip in the new situation will do so because they think that the social norms require it: “Which in turn raises the profitability of creating new tipping opportunities, which in turn muddies the understanding of social defaults, and so on. That is indeed the Dantean inferno we live in these days.”
Cowen proposes that “tipping makes most sense when the quality of service potentially varies, and is elastic to the effort of the server.” This is indeed the practice that would make tipping most rational, but it’s no longer the rule -- if it ever was -- even in restaurants.
Tips, of course, are part of income. If better service would lead to better tips, those whose income is heavily dependent on tips would have an incentive to provide better service. But given that we know that the size of the tip tends not to vary with service, tipping can’t function as the basis of an exchange of higher pay for better service, unless the tipper is able to consistently pay above the amount set by the social norm and is also able to signal to potential tippees in advance his willingness to do so.
All of which leads me back to my neighborhood, where the norm is that we leave gifts for the sanitation workers. I have no trouble with gifting itself, any more than I have trouble with tipping. (I admit to a tendency to over-tip, as measured by social norms.) The part that’s hard to explain is why, if every homeowner is going to give a gift anyway, the workers bother to stand the cans up straight for a few weeks before or after.
Maybe what we’re seeing in action is another social norm. Maybe the men who get up early and work tirelessly at a job that few in my neighborhood would want are in an ironic but honest way honoring a venerable but dying tradition by saying thank you.
There is evidence that tipping may vary, both by the race of the tipper and the race of the tippee. A 2005 study of taxicab rides in New Haven, Connecticut, suggested that black drivers systematically receive lower tips than white drivers, but also that black and Hispanic passengers tend to tip less than white passengers.
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