Understanding The Psychology of Tipping

Tipping is a widespread practice in the United States, particularly in the restaurant industry, contributing significantly to the economy. This blog explores the psychology of tipping, diving into the various reasons people tip, its impact on service quality, and restaurant profitability. We will examine two key studies that shed light on tipping as consumer behavior and the underlying psychological motivations.

The Evolution of Tipping: From Incentive to Tradition

Tipping originated as a means to incentivize underpaid workers and encourage better service. It has evolved, becoming more structured, with etiquette guidelines for proper tipping behavior. Tips now constitute a significant portion of income for service industry workers. What distinguishes tipping is its reliance on unspoken traditions rather than explicit rules, making it an intriguing subject for the study of consumer behavior.

The Motivations Behind Tipping

Tipping is a complex social behavior driven by a range of motivations. Customers tip for various reasons, including encouraging better future service, rewarding exceptional service quality, experiencing the satisfaction of tipping, and conforming to social norms. Research indicates that people derive happiness from spending money on others, fueled by feelings of empathy and compassion.

While some people tip in the hope of securing better service on subsequent visits, this isn’t the primary motivation. Studies demonstrate that people tend to perceive the appropriate tip amount similarly, whether they are at their favorite restaurant or a place they wouldn’t return to. This suggests that tipping is predominantly influenced by psychological and social factors, rather than a desire for improved future service.

Tipping can also be seen as a way of expressing gratitude for excellent service, avoiding uncomfortable situations, and promoting fairness. Social norms play a significant role in tipping customs, creating a sense of guilt when they are not followed. This guilt stems from external pressures like peer influence and internal notions of fairness.

Golnoush Esmaeily’s Insights – Study #1

In this section, we explore findings from Golnoush Esmaeily’s study, “The Economic Behavior of Restaurant Tipping: The Effect of Tipping on Profit,” conducted at the University of Louisville.

This study involved both customers and servers, and it gave us useful insights into tipping behavior. The findings show that most people see tipping as essential and have different reasons to support it. While the amount tipped varies, most respondents tend to tip their server most of the time. It’s interesting to note that this survey revealed that many people don’t think restaurants make big profits from the tipping system. 

Why Tipping Matters

Tipping is not just a one-sided practice; it involves multiple parties – customers, servers, and restaurants themselves. Each of these parties has its own set of incentives for participating in the tipping system.

From the customer’s perspective, tipping allows them to have some control over the amount they pay for service, and it can also be a way to express their appreciation for the service they receive. The survey results also revealed that a substantial number of customers prefer tipping over service charges.

For employees who receive tips, customers tipping can significantly impact their income. Servers typically believe they deserve to be tipped and prefer a system that combines an hourly wage with tips. However, some servers may also be required to share their tips with other staff members, reducing their overall income.

Customer Focus: Study #2

This section delves into a study conducted by The Association for Consumer Research, titled “Tipping As a Consumer Behavior: a Qualitative Investigation”. 

This study looked at tipping from a consumer’s perspective and began by interviewing restaurant wait staff. Past research on tipping mainly looked at how tipping affects service providers, like their job satisfaction and feelings toward customers. However, this new research shifts the focus to consumers and what factors influence their tipping choices.

Factors Shaping Tipping Behavior

The study found that tipping is influenced by different things: the person tipping, the service quality, and the situation. People being interviewed thought that how much a customer tips depends on their understanding of tipping norms, how good the service is, and the unique dining situation. Importantly, they saw service quality as not only being fast but also about how well the customer and waitstaff got along.

Customer Stereotypes

The house staff had common beliefs about customers and how they tip. For example, many thought that older women were often not good tippers. But most tipped employees acknowledged that these beliefs weren’t always accurate. They pointed out that it was hard to predict who would tip generously, and sometimes their assumptions about customers actually influenced how the customers tipped.

Quality of Service and Tipping

Quality of service was a key factor in tipping decisions, according to the study. The house staff emphasized that attentive service, including anticipating customers’ needs and creating a pleasant dining experience, was crucial. This contradicted some earlier research findings, indicating that service quality did not necessarily influence tips.

The Waitperson as Customer

Finally, the study revealed that restaurant employees who work as a tipped employee tend to be generous tippers when they are customers themselves. This behavior likely stems from their understanding of the challenges and expectations of the job, as well as their interactions with fellow professionals in the industry.

Conclusion

Tipping is a complex social phenomenon with multiple motivations and implications for various stakeholders. Understanding the psychology behind tipping, the role of social norms, and the impact on restaurant profitability can shed light on this common but often puzzling practice. Tipping is more than just an economic transaction; it is a reflection of human behavior and social dynamics, making it a captivating subject for continued research and discussion.

Discover how TipHaus can transform your restaurant’s tip distribution. Click here to explore the platform. 

Sources: 

McCarty, J.A. et al. (1990) >tipping as a consumer behavior: A qualitative investigation: ACR, ACR North American Advances. Available at: https://www.acrwebsite.org/volumes/7091/volumes/v17/NA-17#:~:text=Situational%20factors%20include%20who%20is,of%20consumers%20and%20service%20providers (Accessed: 19 October 2023). 

Esmaeily , G. (2021) The cardinal edge – university of Louisville, The Cardinal Edge. Available at: https://ir.library.louisville.edu/cgi/viewcontent.cgi?article=1063&context=tce (Accessed: 19 October 2023).