Who Do We Tip and Why? An Empirical Investigation
AbstractAn important question about social norms is whether they are created to increase welfare; I address it by examining the characteristics of tipped and non-tipped occupations. Tipping prevalence is negatively correlated with worker’s income and consumer’s monitoring ability and positively with consumer’s income and closeness between the worker and the consumer. The results refute a common belief that tipping exists to improve economic efficiency by lowering monitoring costs. Tipping, however, is more prevalent when consumers feel empathy and compassion for workers and want to show gratitude for good service, suggesting that tipping might increase welfare if welfare includes psychological utility.
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Bibliographic InfoPaper provided by EconWPA in its series Labor and Demography with number 0502005.
Length: 20 pages
Date of creation: 20 Feb 2005
Date of revision:
Note: Type of Document - pdf; pages: 20
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Tipping; Service industries; social norms; social welfare; behavioral economics; feelings; emotions;
Other versions of this item:
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- L8 - Industrial Organization - - Industry Studies: Services
- D0 - Microeconomics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-04-16 (All new papers)
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