Getting into (Blue) Heaven ... 20% at a time

There has been a proliferation of "Tipping" stories in the news in the last few months, and I thought I'd weigh in on the topic as it's one of those fascinating questions that economists (and social scientists in general) puzzle over that force us to think more carefully about our models of human behavior.  That, and because one of my favorite under-rated movies of all time provides this kernel of wisdom from Steve Martin, aka Vincent Antonelli, aka 'Todd Wilkinson' ...

"It's not tipping I believe in - it's OVER tipping!"

Words to live by.

People have strong feelings in both directions about tipping.  On the one hand, there's the "Mr. Pink" philosophy [Mr. Pink on tipping -NSFW] that tips are stupid.  Economists as a whole tend to lean this way from a "rational behavior" standpoint - particularly if you're eating in a restaurant you're unlikely to return to.   ... you've already gotten your service so what's in it for you to voluntarily pay extra for it?  You can make a clean getaway and never see this person again - right?

If, however, this is your everyday watering hole and you're likely to come back tomorrow and the day after then it makes rational sense to tip as a down payment for good service in the future - when I walk into the Waterfront, I like that I don't even have to say anything and a glass (or pitcher) of Two-Hearted will automatically arrive at the table with a water - that kind of service is worth something, and thus the repeated-game strategy is very different from the one-time shot of eating in an out-of-town restaurant   Even here, however, there's no guarantee you'll end up with the same server and you're banking in some sense on developing a reputation as a good (or bad) tipper that the whole bar or restaurant will talk about - so even in this case, there are some interesting strategic choices - do you tip *just enough* to not get talked about, or do you tip so much that everyone knows about it?  And if you do that, do you do so every time, or just once in awhile?

Or, do we tip for other reasons entirely?  If we're not tipping to get ourselves better service, then it must be out of a sense that our meal was under-priced and we feel like we 'owe' it to the establishment/server to kick in a little extra.  This can be a clever form of price discrimination by the restaurants - rather than paying the waitstaff more by putting a higher price tag on the menu and risking losing some customers, they put the smaller price on the menu and hope that on average their customers will make it up via tips.  This imposes a great deal of financial risk on the waitstaff though, whose wages become uncertain, and an awkward level of uncertainty on the part of the customers who might rather just pay a flat fee and have no reputational uncertainty (or tip calculating math - more on that later) to wonder about.  Thus, there is potentially a great deal of inefficiency in the tipping mechanism.  Not to mention a good deal of tax evasion from under-reported cash tips.  These types of arguments are outlined in many economics papers such as this one: The Case Against Tipping.

While I'm sympathetic to the theoretical economic modeling of the problem, I am probably in the minority among economists as a devout follower of the Vincent Antonelli school.  Have you seen the episode of Curb Your Enthusiasm where Larry David gets in trouble for sneaking back to the table and kicking in extra to make up for a cheap tip by his table-mate?  That's me.  I seem to have an almost unhealthy fear of leaving a cheap tip, partly I think because I spent two summers in food service and was routinely tipped the least when I was working the hardest.  So is this pure altruism, do I get a "warm glow" from leaving a good tip as Jim Andreoni might suggest, or am I worried about reputational issues?   In truth, I have no idea - I think it's a mixture of these things, but I'm really not sure what the strongest motivator for me is.  Which is why it's such an interesting question when it comes to modeling behavior.

Incidentally, it seems the reputational power of the tip has grown in recent years with social media.  There are a number of sites such as the Bad Tips facebook page, the <15% tumbler feed, IGot$tiffed.com, or the Lousy Tipper Database, which are making the consequences of bad tipping much more public (as well as sharing the pain of getting tipped in napkin doodles, fry messages, or chuck-e-cheese tokens). The ease with which a bad tip can go viral has been seen in the last few weeks with the "Sorry, Single Mom" no-tip story, which created a firestorm of outrage that someone would rack up a $140 bill but draw the line at adding a tip.  One-upping the bad-excuse tip was this week's story seen below which was my inspiration for this post:

My general feeling - if you want to leave a bad tip, that's your right.  But don't claim it's because you can't afford it.  You're in a restaurant ... you can clearly afford it or you'd be at the grocery store and cooking your own meal or else getting cheap fast food.  And DEFINITELY don't use it as an opportunity to make your political platform known to the person who is squeaking by on tips (and likely has no health care).  That's a good way to get your food spit in (or worse).

Anyone wanting to read more here about research on tipping can find some great papers exploring everything from racial and age differences in tipping to how particular actions and posture by waitstaff effect tips to the effect of candy with the bill.

So, what do you think?  Why do YOU tip (or not tip)?  What kinds of services are tip-worthy?  Stories to share from the trenches of food service?  Are you a proud bad tipper?

...PS:  One last topic - Math Illiteracy and "Tip Calculators"
People's inability to do basic math to calculate tips completely infuriates me and so I'll take this opportunity to go on a mini-rant - Here's a tipping tip for you:  Throw away your tip calculator.  Look at your bill.  Move the decimal one place to the left.  That's 10%.  Now double that number.  That's 20%.  If paying in cash, round up or down a little as needed to match what you have conveniently, but don't stray too far.  That's your tip.  At least if you want to get into heaven, Vincent Antonelli style.