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Last week, Philadelphia Eagles running back LeSean McCoy came under fire after leaving a 20-cent tip for a $61 meal at a burger place. The minor storm of outrage provoked by the incident was predictable. But why? Why do we pay an extra 15 percent or more for our restaurant meals? And why are we so outraged when someone else doesn’t?

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In 1997, economists Örn B. Bodvarsson and William A. Gibson wrote about tipping in the American Journal of Economics and Sociology. They say tips started in England as small bribes given to servants to encourage better performance. The practice spread to other parts of the world (notably excluding many highly egalitarian societies like the Scandinavian nations) because it offers a big advantage to restaurant and bar owners. Customers are in a better position than managers to see whether servers are performing their jobs well, including subtle things like a friendly smile. By giving customers part of the responsibility for compensating workers, a business effectively outsources part of its supervisory work to them.

That might explain why restaurants like tips, but why do the rest of us leave them? Most of us would say because it’s the right thing to do. In Bodvarsson and Gibson’s words, it’s a “social institution” that we’d feel guilty for ignoring. In a study of 697 patrons at seven central Minnesota restaurants, they found most people tipped using a rule of thumb that gratuities should be about 15 percent. In other words, they paid what they thought they ought to as part of the price of eating out.

But rewarding servers’ efforts played into tip amounts as well. The percentage was higher when a waiter or waitress had to make more trips to the table and when diners rated the service highly. The fact that customers considered service in calculating tips, even when they weren’t regulars at a given restaurant, suggests that this isn’t a simple self-interested move. Instead, the economists suggest it can be explained by game theory, the academic specialty that gave us the Prisoner’s Dilemma. Diners may tip well, with the expectation that others are doing the same, to help create an environment of good service that benefits them in the long run. “The act of tipping, ignoring the social norm of tipping, is irrational, but supporting the rule of tipping by leaving tips is rational,” the authors write.

On the other hand, it’s worth noting that the survey data were noisy. Some tips are based on how many singles diners happen to have in their pockets, or a rough calculation designed to get to a reasonable amount. In the big picture, tipping might work out in a rational way, but that doesn’t mean any given server makes in a night is economically “correct,” particularly if they run into someone who tips like McCoy did.


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The American Journal of Economics and Sociology, Vol. 56, No. 2 (Apr., 1997), pp. 187-203
American Journal of Economics and Sociology, Inc.