A Defense of More Variable Tipping

I find that most people’s tipping at restaurants varies by about five percent, say from 15 to 20 percent. I believe that this variation is too low and that people ought to have a larger tipping range (e.g. 10 to 30 percent). Why? Two of the primary purposes of tipping are to reward good service and to set an incentive for good service in the future.  Assuming that you do not repeatedly have the same waiter (I will use waitress in my next post that mentions the waitstaff: I’m not taking any critiques for gendered language.) at a restaurant, the waiter generally has his other customers to use as a basis for comparing tips. Yet, there’s some natural variation in different individuals conceptions of what constitutes a “good” tip. One person’s 15 percent may be another person’s 20 percent.  Accordingly, 15 percent may be a “good” tip for one person but a “bad” tip for another person and the waiter has no way of discriminating between the two.

Increasing the range of your tipping makes it easier to signal to the waiter whether you like or dislike the service. Assuming you have a fairly normal distribution of server quality, this should neither make you bankrupt nor a cheapskate. You should have about as many 10 percent tips as 30 percent tips and because of your increased range you can send more accurate signals to waiters about good and bad service.  Assuming that using broader tipping rangers becomes a general trend waiters would have a greater incentive and reward for good service.

A common objection I hear from conscientious friends when I tip on the lower part of the range is: “Waiters don’t get paid very much and need the tip money to make a decent living.”  I don’t think this argument holds water: first, one individual’s tipping behavior is fairly trivial when compared to the waiter’s “salary”, his overall tips for the week or month. You may still respond: “True, but what if everyone tipped the way you do?”  I think this actually plays into my argument. If everyone tipped with a wide range, really good waiters would be able to make a much more decent living, raking in 25 or 30 percent tips, while the lackluster waiters would be the ones bringing in the lackluster tips.

Before closing, let me note that there are two important assumptions I’m making: 1. That waiters don’t pool tips (if they do, the “incentive” argument is much less powerful) and 2. That people vary their tip for the right reasons (e.g. poor food is no reason to lower the tip unless the waiter suggested a poor dish or somehow influenced the quality of the dish).

Anyone opposed to more variable tipping?

2 responses to this post.

  1. Josh, what about the collective action problem? Most people probably tip the way they do because there would be a social stigma from tipping less (and actually maybe from tipping more – remember how we made fun of that friend of ours that gave $20 bills to bums?). It’s tough for one person to get this going. Any suggestions?

    Reply

  2. Posted by Josh on June 4, 2009 at 6:49 PM

    Hence, why one of the categories of this post is “Stuck in a Poor Equilibirum”. I’m dubious that there’s much of a social stigma towards towards tipping 30 percent (tipping undeserving homeless people is different than tipping a meritorious waiter), so the issue is with the stigma of tipping low. If you eat out regularly with people, they will see that you tip both high and low and you can explain the reasoning to them. Even if you don’t eat out regularly with them you could explain the reasoning of the lower tip. I don’t think the social stigma affiliated with tipping 10 percent is so strong that an explanation wouldn’t eliminate the stigma.

    Regarding shifting out of the equilibrium, I think that’s very difficult. I see two feasible solutions:

    1. The readership of nopunintendedblog.com increases to such an extent that a critical mass of restaurant-goers read this blogpost and understand the logic behind more variable tipping.

    2. Restaurants themselves go ahead and put suggested tipping amounts for different types of service. Some restaurants do this already and it’s extremely powerful. If it says suggested tip 18 percent, people are going to be extra hesitant before tipping 10 percent. If a restaurant says tip 10 percent for very poor service and 30 percent for great service, this is in their interest too by making it VERY explicit to the waiters (as well as the customers) that service matters and will be likely to significantly influence tipping amounts. This also addresses the social stigma issue: if the restaurant itself is defending tipping more variably, how could you ignore them?

    Reply

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