understandingtipping

understandingtipping - Understanding Tipping An Economic...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Understanding Tipping An Economic Analysis Hunter Hayes Economics of Discrimination Spring 2007 Dr. Molina
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
“Tips or gratuities were often associated with ‘drink money’, seeming to imply that the customer was buying the server a drink to have later as a way of saying thanks for the good service. This theory implies that the customer was trying to prevent making the waiter envious of his own ability to sit, drink, and be served.” - George Foster (U.C. Berkeley) People tip for various reasons, as many studies have been done to show this. There are several categories of reason in which people tip, ranging from conforming to the social norm to the appeasement of a guilty conscience. This economic analysis aims to prove that while people tip based on their own category, perhaps other influences might affect the kind of tip they leave. In the light of the economics of discrimination, would sex, service history, or price affect how much a person left for a tip? For this paper, I gathered a small amount of data from my work, hoping that I would be able to see some sort of a trend regarding the price of customers’ services and the kind of tip they left. When dining out at a restaurant, it is customary to leave a small amount of money on top of the bill for what has already been paid to eat. Why is this? Why must a consumer actually pay more for what they have already consumed? They are not really paying waiters for their services during the meals, as waiters already receive an hourly wage. These questions are only a few that arise when trying to explain why tipping actually exists today. Many respond that they tip because everyone else is doing it, or
Background image of page 2
that it is customary, or even sometimes expected. For this, we may thank the social norm. The social normality is a trend that the general public usually follows. Ofer H. Azar, in his paper over the history of tipping explained that “people tip because this is the social norm and disobeying social norms results in a psychological disutility.” He later goes on to discuss how the psychological disutility from ‘stiffing’, or not leaving an adequate amount of money or sometimes none at all, can be broken down into two sources. The first he explains is external disutilities, which “are those that come from other people and are therefore related to social pressure.” An example of an external disutility could best be exemplified in a situation where a host is taking guests out to dinner. At the end of the meal, it would appear that they would be judged on whether
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/16/2008 for the course ECON --- taught by Professor Molina during the Spring '08 term at North Texas.

Page1 / 8

understandingtipping - Understanding Tipping An Economic...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online