Why we tip and how to get a bigger tip

'I don't tip because society says I have to. All right, if someone deserves a tip, if they really put forth an effort, I'll give them a little something extra. But this tipping automatically, it's for the birds. As far as I'm concerned, they're just doing their job.'
Mr Pink, Reservoir Dogs.

Stats from the USA suggest that $40 billion is spent on tips every year. Yet from the traditional economic perspective, which sees us as rational agents operating in our own interest, tipping waiters, barbers, taxi drivers and other service workers is crazy. You don't have to so why do you? That's if you do. Not everyone does. In an effort to explore our motivations for tipping, Stephen Saunders and Michael Lynn sent out 29 fieldworkers to survey 530 South African citizens after they'd had an encounter with a car guard. These unpaid workers are a common sight in South Africa at shopping centres, hospitals and schools. They help with parking, protect the car from vandalism and assist drivers with loading shopping and luggage.

One explanation for why we tip is that we're trying to encourage good service in the future. However, Saunders and Lynn found no evidence that people who used a car guard more were more likely to tip, as you'd expect if this were their true motive. By contrast, perceived service quality was associated with both the likelihood of giving a tip and the amount tipped, thus suggesting that participants were using tipping as a form of reward. Similarly, those who said they thought it was important to help others in need tended to tip more (although they weren't any more likely to tip), suggesting altruism was another motive. Finally, social norms were a key factor - participants who said their friends and relatives thought it was important to tip were more likely to tip themselves, especially if there were more people with them at the time of questioning. Size of tip was not associated with this factor, perhaps because it's only the act of tipping that's visible to others, rather than the amount tipped.

'Hopefully this paper will encourage more economists to look beyond the apparent irrationality of tipping and to study it from both a behavioural economics and psychological perspective,' the researchers said.

In a separate study, based in Utah, John Seiter and Harry Weger tested the effects of ingratiation on food servers' tips. They had two waiters and two waitresses go about their usual duties but with a twist: for half the parties they served they were instructed to compliment the customers, telling them that they'd made an excellent choice in what they'd ordered. Counting the tips received from 348 dinner parties showed that complimenting customers on making a shrewd order led to tips that were three per cent greater on average than when no compliment was made - a statistically significant boost.

'A roughly 3 per cent increase may seem a small amount,' the researchers said, '[but] an additional $1 to $5 per shift could translate into hundreds of dollars per year for each food server.'

More in-depth analysis showed that complimenting customers on their order only led to bigger tips for parties of two to three people. It made to no difference with a party of four and actually led to smaller tips for groups larger than this (the research involved parties of up to seven). It also turned out that one of the waiting staff had received smaller tips after complimenting customers (even though the group average was for larger tips in this condition). Seiter and Weger surmised this could be because she didn't come across as sincere.

This study builds on earlier research showing that use of mimicry, light touches on customers' shoulders, happy faces on the bill and squatting to customers' eye level can all help provoke larger tips.
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Saunders, S., & Lynn, M. (2010). Why tip? An empirical test of motivations for tipping car guards. Journal of Economic Psychology, 31(1), 106-113 DOI: 10.1016/j.joep.2009.11.007

Seiter, J., & Weger, Jr., H. (2010). The Effect of Generalized Compliments, Sex of Server, and Size of Dining Party on Tipping Behavior in Restaurants. Journal of Applied Social Psychology, 40 (1), 1-12 DOI: 10.1111/j.1559-1816.2009.00560.x