In 1922, famed etiquette writer Emily Post advised her readers that 10% is the standard for tipping your waiter. Since then, “gratuity creep” has been so steady that tip jars are now ubiquitous and 25-30% is considered the rule in New York City. Uber once resisted this trend, but recently added a tipping feature to its app. What is the economic rationale behind tipping? Does the usefulness of tipping diminish the more that a certain rate becomes an expectation? At a certain point, would it be better to do without the fuss involved and simply include that portion of a service provider’s compensation in the wages paid by the employer? Economists Antony Davies and James Harrigan explore these questions and more.
Supporting Data
- How Much Do Waiters Really Earn in Tips? | www.theatlantic.com
- PayScale's Restaurant Report Full Data | www.payscale.com
- Waiters and Waitresses | www.bls.gov
- Tips | www.dol.gov
- Fact Sheet - Wage and Hour Division (WHD) - U.S. Department of Labor | www.dol.gov
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- 37. Traveling at Home and Abroad. Post, Emily. 1922. Etiquette www.bartleby.com
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Antony Davies
Antony Davies is associate professor of economics at Duquesne University and Chief Academic Officer at FreedomTrust.
He is a member of the FEE Faculty Network.
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