Tipping is said to have originated in 16th Century England, when overnight guests would leave money for their hosts’ servants.
Tipping as a phenomenon has long fascinated economists: paying extra, even though we are not legally required to do so, seems to go against our own best interest.
The practice has spread all over the world. But anyone who has travelled internationally knows that the customs surrounding tipping – when to tip, how much, to whom and why – differs from place to place. In the United States, it is customary to tip a restaurant waiter or waitress 15-25%; in Brazil, 10%, in Sweden, 5-10%.
In other countries like Japan, however, it is so uncommon that leaving a monetary gratuity is almost taboo and can sometimes lead to confusion over who has left money and why.
Foreign students, business travellers and tourists that come to the US may adopt the practice of tipping and bring it back to their home country.
“Research shows that the more extraverted the personality traits of people in a country, the greater number of service providers they tip and the larger amount they tip,” says Michael Lynn, a professor of food and beverage management at Cornell University who has studied tipping extensively. But, he says, that is not the only reason why some countries tip more than others. Social norms, differing wages, and whether service charges are customary also play a huge role.
There’s evidence tipping customs can also spread from place to place. One 2016 study revealed travel to the US is a factor in shaping tipping rates in other countries. “Tipping is economically consequential but at its root it’s a social norm,” says Edward Mansfield, a professor of international relations at the University of Pennsylvania and the author on the study.
Mansfield says that foreign students, business travellers and tourists that come to the US may adopt the practice of tipping and bring it back to their home country. “For countries where there are more people who come to the US as a percentage of the total population of that country for the rate of tipping in their country tends to be higher,” he says.
Lynn says we have several different motivations on an individual level for tipping, including wanting to encourage better service on the next visit, or to reward or please their server or gain social approval. While his surveys have shown that in the US, they are the minority, Lynn says many people also tip to abide by social norms and avoid disapproval.
Hotel workers in London last year protesting for mandatory rules on tipping in hotels and restaurants so that the staff get 100% of all tips (Credit: Alamy Live News)
Our various motivations for tipping also determine when we are likely to tip. Those who tip for social status more often tip for infrequently tipped occupations like car mechanics or veterinarians. People who tip for the sake of the server are more likely to tip workers in all occupations and especially those that are infrequently tipped. However, people who tip out of obligation tend to only tip frequently tipped occupations, such as a parking valet.
The higher the recommended tip amount, the fewer people will leave a tip. More people will just say ‘oh forget it.’ But those who do tip will tip more - Lynn
A restaurant may include a line on its bill that suggests customers pay a further 20%. Suggesting or recommending a high tip amount risks backfiring but could end up in a higher payoff. “The higher the recommended tip amount, the fewer people will leave a tip,” says Lynn, who has studied the phenomenon by looking at tipping through a laundry service app. “More people will just say ‘oh forget it.’ But those who do tip will tip more, and overall the servers come home with more money.”
But given our different motivations for tipping, is tipping a good practice in the first place? Is it advantageous? Or even fair?
That depends on whose perspective you take, says Lynn. The government would stand to gain if we abolished tipping, since much of the money changing hands goes unreported and is not taxed in the same way other income is.
In many countries, bartenders and servers at restaurants depend on tips to earn a livable wage (Credit: Alamy)
The majority of workers in service industries, however, may be better off in a tipping culture, since they can make more than in a job with similar skill requirements. “As one example, restaurant servers in New York City are making roughly $30 an hour. Cooks in the back of the house make about half of that. You could argue that tipping overpays service,” says Lynn.
From a restaurateur perspective, tips allow a restaurant to pay their staff less and therefore offer lower menu prices. However, owners also don’t have access to tips and can’t redistribute them to other staff members, like back-of-house employees.
Tipping decreases the perceived expensiveness of restaurants because the cost of service isn’t built into menu prices - Lynn
And it might affect customer satisfaction. A forthcoming article in the International Journal of Hospitality Management by Lynn and Zachary Brewster indicates that in many cases, restaurants will be rated less favourably by customers online if they move to a no-tipping policy. Restaurants that abolished tipping rated a third of a point lower, on an online five-point scale customer rating, with restaurants that replace tipping with a mandatory service charge seeing worse reviews than if the restaurants used service-inclusive pricing.
“The reduction of (higher) customer service ratings has a lot of underlying factors. Customers expect that tips motivate better service. So I expect a restaurant that has tipping to have better service and expect to be more satisfied, which can bias my perception,” Lynn says. “Tipping decreases the perceived expensiveness of restaurants because the cost of service isn’t built into menu prices. If you replace it with a hated service charge, it’s clearly a cost. If you build it into menu prices, I don’t hate the idea of paying for service through menu prices it but your menu prices are now higher, so it seems more expensive.”
There was an exception though. Upscale restaurants that used service-inclusive pricing did not see a decline in reviews.
“Expensive restaurants have other cues to indicate good service. I expect it to have great service even if they don’t have tipping, because it’s so damn expensive and everything around me, [like] the ambiance, is telling me it’s a fancy place with good service. Expensive restaurants are also typically smaller and the server-to-customer ratio is lower, so management can make sure servers are doing a good job, even if they don’t have tipping as an incentive. Finally, wealthier customers care less about increases in price, and are more likely to have encountered no tipping systems when they’ve traveled outside the US.”
In a tipping world, our guests are deciding how much our front-of-house team members are being compensated - Moran
The risk associated with changing to a no-tipping policy hasn’t kept some restaurants from trying. The Union Square Hospitality Group (USHG) started eliminating tipping in their restaurants, starting with The Modern, located in New York’s Museum of Modern Art, in 2015.
Erin Moran, chief culture officer at USHG, says the group decided to eliminate tipping so they could increase wages for the back-of-house team and directly manage career paths for staff members.
“In a tipping world, our guests are deciding how much our front-of-house team members are being compensated.”
Moran acknowledges that their bottom line took a hit with the new policy. And that it has been more of a challenge than they expected. But guests have embraced the change, staff turnover has started to decline at The Modern, and she believes not paying servers extra will pay off for the museum in the long run.