Tipping culture - necessary or not?

Imagine you are a tourist with no knowledge of tipping culture, going on a holiday to the United States, ready to have a taste of a new culture. As you settle into a cosy dinner in Los Angeles, you are met with friendly service and delicious food. But as the bill arrives, you're faced with a perplexing question: how much should you tip?

Should American restaurants abolish tipping? - Fuse

Tipping culture is a custom deeply ingrained in some societies. In the United States, tipping has become an integral part of the service industry, with gratuities often comprising a significant portion of workers' income. About nine-in-ten adults in the United States who eat at sit-down restaurants (92%) say they always or often leave a tip in this scenario. (DeSilver & Lippert, 2023) But why is tipping so popular in some places and not in others? Is it truly necessary, or is it merely a social convention that has become deeply entrenched over time? Let's explore more deeply into this complex culture together.

Socially enforced tipping

In many countries, tipping seems to be more of an obligation than a choice. Even highly developed countries like the USA have an ingrained tipping culture, which service workers typically live off of. Azar estimated that around $47 billion of the US food industry is made up of tipping alone, each year (Azar, O.H., 2011). This means that tipping makes up around 3.6% of the total US food industry annually, based off of Statista’s 2011 U.S. food sales release, with total food sales equalling ~$1.304tr (Statista, 2016). This begs the question of what drives tipping, for it to be as large as it is. Well, to start off with, people tend to derive the utility of tipping from the need to reward people for good service. This can also evolve into a method of exerting power over workers, where the lack of a tip can help customers signal poor service and be used as a punishment (Azar, 2004). Alternative models to tipping, like service charges, aim to ensure fair compensation for hospitality workers in a more ‘enforced’ manner. The typical rate of a service charge (or ‘gratuity’), tends to be between 12.5% and 20% depending on the country.

Uncovering the ripple effects

The decision to tip, and how you should tip, can be influenced by a variety of psychological reasons such as the desire to conform to social norms and the fear of social judgement, the intent to reward good service, and/or empathy towards service workers. For instance, the existence of peer pressure has been found to affect the propensity for people to tip and the amount that they tip, even in countries where tipping culture is not as socially enforced as it is in the US, such as in Norway (Thrane & Haugom, 2020) whereby customers are likely to be more generous with their tipping with the existence of peer pressure. Empathy towards service workers, as mentioned, as well as other emotive reasons also influence the tipping habits of customers (Thrane & Haugom, 2020). Interestingly, this undermines the assumption that consumers are ultra-rational - in the sense of maximising personal benefit - with their finances, and highlights how people's spending habits are deeply embedded in the complexities of human emotion and social pressures and expectations.

When it comes to tipping as a reward for good service, a study on the matter investigating the correlation between the perceived quality of service and the magnitude of the given tip shows that there is indeed a positive correlation, barring alternative reasons for the tip (Lynn & Sturman, 2010). Extrapolating from this, it could be said that tipping can have external benefits other than supplementing the wage of workers. Tipping culture incentivises service workers to provide better service to receive more in tips resulting in better service throughout the service sector regardless of whether or not they tip.

A dual viewpoint analysis

The intricacies of American tipping culture are encapsulated in a recent Pew Research Center study. From the customer's perspective, “fairness” is crucial: 29 percent of respondents said mandatory tipping is fair, while 21 percent said voluntary is more reasonable, and the rest stated it depends on the situation. Meanwhile, if the service is average, 57 percent said a tip of 15 percent or less is fair, and 2 percent said they will leave nothing. Only about a quarter said they would leave 20 percent or more (Heil, 2023). Therefore, in a landscape where the suggested tipping rate has quietly risen, the public's dissonance is palpable.

Moreover, the tipping system's deep-seated issues extend beyond customer discomfort, as employees highlight the inequities it perpetuates, because in the United States, employees who receive tips regularly can be paid less than the standard minimum wage, leading to income instability. And for women in the service industry, they are more likely to be harassed (Heil, 2023). These facets paint a picture of a tipping culture at a crossroads, where clarity and reform are increasingly called for by both customers and workers alike.

Navigating the complexities of tipping culture

Tipping culture is ingrained in some countries like the United States, its necessity and implications is a heated debate among people. While tipping serves the purpose of acknowledging good service and providing additional income for workers, it also reveals inherent inequities and uncertainties. The decision of tipping depends on people's spending habits, which is highly affected by human emotions and social expectations. There is no conclusion about whether tipping exists because people want to reward the workers or is simply because of social pressures, but regardless of the reason behind, tipping culture shapes the dynamics of service industries and the experiences of workers and customers. While tipping has both pros and cons to the society, tipping should be comfortable for both customers and workers, therefore striking a balance between acknowledging service and ensuring fairness and equity in compensation is essential despite the complexities in different aspects.

References

- Azar, O.H. (2004). What sustains social norms and how they evolve? Journal of Economic Behavior & Organization, 54(1), pp.49–64. Available at: https://www.sciencedirect.com/science/article/pii/S016726810300221X (Accessed: 6 Apr. 2024)

- Azar, O.H., (2011). ‘Business strategy and the social norm of tipping’. Journal of Economic psychology, 32(3), pp.515-525. pp. 1-2. Available at: https://www.researchgate.net/profile/Ofer-Azar/publication/227345892_Business_Strategy_and_the_Social_Norm_of_Tipping/links/60b27896299bf1f6d58486ff/Business

-Strategy-and-the-Social-Norm-of-Tipping.pdf (Accessed: 22 Mar. 2024).

- Parrett, M.B., (2003). ‘The give and take on restaurant tipping’. Virginia Polytechnic Institute and State University. pp. 19-43. Available at: https://vtechworks.lib.vt.edu/bitstream/handle/10919/11049/ETDDissertation.pdf?sequence=1%26isAllowed=y (Accessed: 22 Mar. 2024).

- Statista (2016). Total food sales in the United States from 1990 to 2014. Available at: https://www.statista.com/statistics/207856/us-total-food-sales-since-1990/ (Accessed 6 Apr. 2024).

- Heil, E. (2023), Americans are confused, frustrated by new tipping culture, study finds, WP Company LLC d/b/a The Washington Post, Washington, D.C., United States Washington, D.C.

- DeSilver, D. and Lippert, J. (2023). Tipping culture in america: Public sees a changed landscape, Pew Research Center.Available at:https://www.pewresearch.org/2023/11/09/tipping-culture-in-america-public-sees-a-changed-landscape/ (Accessed: 9 April 2024).

- Thrane, C., Haugom, E.(2020). Peer effects on restaurant tipping in Norway: Anexperimental approach. Journal of economic behavior & organization. pp. 244-252.

- Lynn, M., Sturman, M. (2010). Tipping and Service Quality: A Within-Subjects Analysis. Journal of hospitality & tourism research. pp. 269-275.