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The implications of tipping for economics and management

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  • Ofer H. Azar

    (Northwestern University)

Abstract

Tipping is a phenomenon that illustrates the importance of social norms and psychological reasons in motivating economic behavior. People tip because this is the social norm and disobeying norms results in psychological disutility. Tipping is also economically important: in the United States alone, millions of workers derive most of their income from tips, and annual tips amount to dozens of billions of dollars. Tipping is also prevalent in numerous other countries around the globe. While tipping has been studied extensively by psychologists, it received very little attention from economists. To encourage other economists to research this interesting phenomenon, I discuss the implications of tipping for several areas in economics: social economics, behavioral economics, labor economics, and economics of information / management strategy. I provide many ideas for future research both as part of the discussion and in a concluding section.

Suggested Citation

  • Ofer H. Azar, 2003. "The implications of tipping for economics and management," Others 0309002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpot:0309002
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    References listed on IDEAS

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    More about this item

    Keywords

    tipping; social-economics; behavioral-economics; social-norms; hospitality-industry; restaurants;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • L00 - Industrial Organization - - General - - - General
    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General
    • J00 - Labor and Demographic Economics - - General - - - General
    • D10 - Microeconomics - - Household Behavior - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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