Tipping: Yay or Nay?

I've never been a fan of tipping. Partly because of the inconvenience of it, and partly because of the awkwardness of it.

The inconvenience is fairly straight-forward: at restaurants and other such venues, you must temporarily turn into Rain Man in order to perform the necessary calculations to determine the proper tip amount. If you pay with a credit card (which I do 99% of the time) then this is simply a matter of math, but the process becomes more inconvenient if the situation necessitates cash, such as tipping a valet. I don't usually carry a lot of cash, and if I do there is no guarantee I will have the proper amount of ones for an adequate tip.

This leads to the awkwardness factor: how much to tip? You'll find that in America at least there are a variety of rules of thumb in place to answer this question for various situations. Of course, you can still have disagreements among people as to how much is the right amount. Most of the tipping that I, and probably a lot of people, do in everyday life happens in restaurants. Thankfully, this is one of the more cut-and-dry scenarios where most people agree on the rule...or do they? I was brought up to tip 15%, but some people insist on 20% or more (usually they were or still are waiters).

Why is it that a waiter at a place like this gets paid more to take your order than a waiter at a cheaper place?
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The Rationale for Tipping (and the Reality)

In theory, tipping can be seen as sort of a capitalistic shortcut, a way to give near-instant feedback for good (or bad) performance, such that the performance will be encouraged (or discouraged) in the future. I'm a fan of capitalism, so I should like tipping, right?

Well, maybe. I'd be a fan of it if it actually worked that way, but unfortunately reality doesn't always live up to our wildest dreams.

In practice, tipping has a few issues with the way it is currently implemented. My main issue with the entirety of tipping is the absurdly vague nature of it combined with the inconsistent philosophies on how much to give. I'm a simple man, I like concrete rules and results; I like knowing what to expect. What I don't like is antiquated rules of thumb of questionable origin that give vastly inconsistent results. I also hate carrying around cash.

Let's look at the restaurant example since it is pretty prominent in America. Since most people agree that tipping 15-20% is the norm, then we can say that it is a concrete rule (which I like)...but it also sort of invalidates the entire premise of tipping. If the waiter is expecting a 15% tip no matter what, then what incentive do they have to do a good job? A rule I usually live by is 10% for mediocre-bad service, 15% for average service, and 20% for really good service. But I mean, what is "good" service? The waiter can only control so many things, if the cook screws up the order and the food comes out late, that's not the waiter's fault (but they probably get the blame for it). If, however, the cook did their job and the waiter forgot about you, then that is 100% their fault, but how are you to know the difference?

I also find that the price of the meal tends to affect my tipping a fair bit. If it's a $10 lunch then I'll probably give $2 regardless of the service since the math is easy to do and it's only 50 cents more for me to feel like a really good person for tipping 20%. If it's a really expensive meal, I tend to lean more towards the 15% mark and no more, since 15% of a big amount is a lot more than 15% of a small amount. I'll also admit that my mood can affect tipping a fair amount as well (if a cute waitress flirts with me a little it doesn't hurt her cause either).

According to science (and by "science" I mean this one study that references other studies), the amount a waiter/waitress is tipped has little to do with the service and a lot to do with other factors, one of which is coincidentally if they are an attractive woman wearing suggestive clothing (color me surprised).

If you know anything about psychology, though, then it's sort of easy to see why inconsistent tipping wouldn't affect overall service. People are incredibly attuned to negative emotions, much more so than positive emotions (as I've discussed before). Imagine if you are a new waiter or waitress and on your first day you try really hard and do what you think is a really good job getting to everyone's table, being attentive, getting every order right, etc. But then, at the end of the day, you realize that you get 15% from most people, 20% from only a handful, and NO tip from a few! You'd probably be pretty peeved that most people just gave you an average tip, and a few had the gall to give you no tip! You probably wouldn't even notice the few that gave you a nice tip. It wouldn't take long for the nihilism to set in, and if the next day you really half-ass your job and still get about the same distribution of tipping revenue, then what incentive do you have to do a good job?

The fact is, if there is little correlation between the desired outcome (good service) and the reward compensation, then the desired outcome will not come to fruition. And as I mentioned before, your overall dining experience is not just determined by the wait staff. The cooks and busboys and other people play a role too, but most of the time the waitstaff will get unfairly rewarded or punished when it isn't even their doing.

Why Is Tipping a Thing In Some Industries?

Why the hell do I have to tip my barber? How much am I supposed to tip my barber? If I don't give him a good enough tip is he going to give me an awful haircut the next time I come in? If he wants more money, why doesn't he just raise his rate? Couldn't you make an argument that the entire payment for a haircut is one big tip, and the one at the end is just the non-mandatory part?

And don't get me started about a place putting "recommended tip amounts" on the bill. Granted, I have complained several times in this article about how I hate not knowing how to tip in some cases, but for some reason it really grinds my gears when I see a "recommended tip amount" for something that I thought I had already paid for. If you're going to go through with that, then just freaking raise your price by the recommended tip amount and don't guilt me into forking out extra cash at the end. It'd be like if you hired a lawyer and paid $300 an hour for legal fees and at the end after you paid the bill he was like "oh yeah, there is a recommended $100 tip for my secretary".

Tipping Is Actually Anti-Capitalist

While some people probably argue that tipping is the most capitalistic thing that you can imagine, I'll argue that it is the exact opposite of that. Tipping, by its nature, is a sort of "soft cost", meaning that no one is going to arrest you for not giving a tip, but you will incur some amount of social shame. Because of this, tipping amounts can vary, and since the tip is just the extension of the total cost of a service, then it means that the service has no true defined "cost".

Since capitalism relies on the voluntary exchange of goods and services, the fact that some services don't have a truly defined cost is a problem. It makes it more difficult for a person to make an informed decision about which service to purchase. If you want to go on a boat tour and you see a business advertising "2-hour boat ride for $40", you might think "yeah, I'll pay $40 for a 2-hour boat ride, that seems fun!" So you pay $40 for a ticket, you go on your 2-hour boat ride and you have a grand ole time. Towards the end of the tour, while you're boozy from the 4 beers you drank and feeling super pumped from sailing the high seas, the boat captain comes over the intercom and says "hey, we strongly recommend that you throw, like, $20 towards the boat hands since they did such a good job."

"What?! You just increased the price of this boat ride by 50%! I was fine paying $40 for it, but $60 is a tad too much. I could have done other things if I had known this would cost $60!"

A lot of industries sneakily hide non-negligible costs of their services within things like tips (or other fees) that are thrown in at the end, after you're more or less committed to purchasing the service. This prevents you from making a truly rational decision about what you are paying for, since you don't really know how much you are going to pay until it's too late!

Here's what I'd rather see: concrete price stratification, which is pretty much what airlines do. You don't tip flight attendants (I don't think...does anyone do this?), instead, you pay for a different grade of ticket. If you want better food and better service, then you fork out money for first-class (or whatever the best class is on that airline). If you don't care about the food but want a slight amount of extra space, go for economy comfort. If you want to be wedged in-between two sumo wrestlers and not pay a ton for it, go for basic economy. It's all right there, you know what you are getting and you pay for it accordingly.

It'd be pretty easy to do this at a restaurant. You could have a "first class" section that has more attentive waiters (and costs more), you could have a "casual" section that costs slightly less and has somewhat-attentive waiters, and you could have a "family" section that's an absolute free-for-all of screaming children. To some degree, restaurants do this already, but not within the same one. You have fine dining, casual, and fast-food restaurants, which all have different grades of food, service, and price (although the former two still have the annoying tip to worry about). I'd just prefer to see smaller variations under the same roof. In my vision, the restaurant would have the same menu for everyone, you'd purely just be paying a different amount for the service. The prices wouldn't vary as much as the differences between a first-class and economy ticket on a plane, it would just be maybe the difference between a 20%, 15%, and 10% tip.

Apparently Some Morons Still Like Tipping (But Mostly In America)

A few years ago, the restaurant chain Joe's Crab Shack experimented with dropping the tip altogether. They simply raised their prices a little bit and paid their wait staff a decent wage (or...decent enough to keep them around). They saw an average of 8-10% drop in customers in the pilot restaurants, and decided to nix the program in all but a few of them.

Apparently 60% of the customers did not like the policy, and claimed that it reduced the incentive for good service. My main question for this is did they really experience degraded service, or did they just think they did because they knew that tipping wasn't a thing. I'd like to see some hard data on service quality with and without tipping, because perceptions are not always reality. I'm sure some people probably had legitimately bad experiences in restaurants without tipping, but, I mean, everyone has had bad experiences in restaurants WITH tipping! If you had a bad experience in a restaurant it could have been due to a myriad of factors, and sure, the lack of tipping could have been a driving force, but the only way to tell that is to compare it to a restaurant where tipping is the norm.

Of course, there is a much larger sample size of restaurants where tipping is not the norm...and they are in Europe (and probably other places). Europe does not have a culture of tipping (in restaurants anyway), so we can use them as a comparison to American restaurants.

Well...maybe not. The European approach to dining is substantially different than the American approach. America is a country where we like to get things done quickly and efficiently (and usually cut corners on quality along the way). Most countries in Europe seem to live by the philosophy of taking a break and enjoying the finer things in life. I remember in Austria walking by a cafe and seeing a well-dressed man in a suit sipping a tall beer and watching the people walk by...at noon on a weekday. In Europe, a dinner isn't merely a way to stuff unhealthy food into your body, it's an experience worth celebrating. So dinners in Europe usually last several hours, and people stay at the table and drink after their meal.

Despite this, when I was in Europe I never really felt like the service was any worse than America. I got my food in a reasonable amount of time and the waiters usually got everything right. Some people may say that European waiters aren't as friendly as American ones, but I'd assert that they'd probably be friendlier to you if you were speaking their language. How friendly are you in America to people who don't speak English?

What Can We Do To Stop Tipping?

If you aren't a huge fan of tipping, then I have good news! We (as a society) have the power to completely stop tipping! All we have to do is stop doing it! It's that easy! Sure, you've been told that wait staff makes basically slave wages and relies solely on tips to survive, and that's true, but if you stop tipping them then guess what, they'll quit their jobs! Since restaurants need waiters, they'll be forced to raise their wages since they know people won't tip anymore, and we'll all live happily ever after.

Unfortunately, that'll probably never happen since you wouldn't be able to deal with the short term guilt you'd feel by making life a living hell for a poor waiter. So I guess we're just stuck with tipping for the foreseeable future.

I also decided to include the table below that shows how prices are affected by a 15% tip. I was wondering if the price increase alone would have driven people away from Joe's Crab shack, since a lot of times people don't really internalize the price of the tip when looking at a meal, so this will help you see that better:

It's entirely possible that Joe's decided to take the opportunity to raise their prices even more than 15% during the "no tipping" experiment, and therefore blamed the decline in customers on the lack of tipping instead of the price increase. I haven't seen the before/after on their prices but it would be interesting to do the analysis.

Well, I hope I have gotten you to think about tipping differently, and if you still like tipping then please, don't tip too much and make everyone else look bad.

One thought on “Tipping: Yay or Nay?

  1. Good points. It is rude to suggest an outrageous tip at the end of a service. The $20 extra for a boat ride was outrageous and should be mentioned in their social media to not use that company because of it. It's important to respond to a company's or restaurant's survey on social media.

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