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The History of Tipping - From Sixteenth-Century England to United States in the 1910s

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  • Ofer H. Azar

    (Northwestern University)

Abstract

Tipping is a multi-billion-dollar phenomenon that challenges the traditional assumption of selfish economic agents who have no feelings and do not care about social norms. This article reviews the early history of tipping and offers an economic analysis of different aspects of tipping. Using the historical evidence, it then addresses two major questions about tipping: why do people tip? And does tipping improve service quality? The reasons for tipping changed over the years, but conforming to social norms and avoiding embarrassment were generally the main reasons. Tipping seems to improve service quality; the extent of the improvement varies across occupations.

Suggested Citation

  • Ofer H. Azar, 2003. "The History of Tipping - From Sixteenth-Century England to United States in the 1910s," Economic History 0309001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpeh:0309001
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    References listed on IDEAS

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    1. Fortin, Pierre & Keil, Manfred & Symons, James, 2001. "The Sources of Unemployment in Canada, 1967-91: Evidence from a Panel of Regions and Demographic Groups," Oxford Economic Papers, Oxford University Press, vol. 53(1), pages 67-93, January.
    2. Azar, Ofer H., 2004. "What sustains social norms and how they evolve?: The case of tipping," Journal of Economic Behavior & Organization, Elsevier, vol. 54(1), pages 49-64, May.
    3. Ofer H. Azar, 2003. "The Social Norm of Tipping: A Review," Others 0309006, University Library of Munich, Germany.
    4. Bodvarsson, Orn B. & Gibson, William A., 1994. "Gratuities and customer appraisal of service: Evidence from Minesota restaurants," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 23(3), pages 287-302.
    5. Lynn, Michael & Grassman, Andrea, 1990. "Restaurant tipping: an examination of three 'rational' explanations," Journal of Economic Psychology, Elsevier, vol. 11(2), pages 169-181, June.
    6. Wessels, Walter John, 1997. "Minimum Wages and Tipped Servers," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 334-349, April.
    7. Lynn, Michael & Zinkhan, George M & Harris, Judy, 1993. "Consumer Tipping: A Cross-Country Study," Journal of Consumer Research, Oxford University Press, vol. 20(3), pages 478-488, December.
    8. Ofer H. Azar, 2003. "The implications of tipping for economics and management," Others 0309002, University Library of Munich, Germany.
    9. Lynn, Michael & McCall, Michael, 2000. "Gratitude and gratuity: a meta-analysis of research on the service-tipping relationship," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 29(2), pages 203-214.
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    Citations

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    Cited by:

    1. Azar, Ofer H., 2012. "The effect of the minimum wage for tipped workers on firm strategy, employees and social welfare," Labour Economics, Elsevier, vol. 19(5), pages 748-755.
    2. Azar, Ofer H., 2011. "Business strategy and the social norm of tipping," Journal of Economic Psychology, Elsevier, vol. 32(3), pages 515-525, June.
    3. Ofer H. Azar, 2007. "Do people tip strategically, to improve future service? Theory and evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 40(2), pages 515-527, May.
    4. Regner, Tobias, 2014. "Social preferences? Google Answers!," Games and Economic Behavior, Elsevier, vol. 85(C), pages 188-209.
    5. Bharat Chandar & Uri Gneezy & John List & Ian Muir, 2019. "The Drivers of Social Preferences: Evidence from a Nationwide Tipping Field Experiment," Natural Field Experiments 00680, The Field Experiments Website.
    6. Azar, Ofer H., 2007. "Behavioral economics and socio-economics journals: A citation-based ranking," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(3), pages 451-462, June.
    7. Greiff, Matthias & Egbert, Henrik, 2016. "A Survey of the Empirical Evidence on PWYW Pricing," MPRA Paper 68693, University Library of Munich, Germany.
    8. Sacha Kapoor, 2020. "Inefficient incentives and nonprice allocations: Experimental evidence from big‐box restaurants," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 401-419, April.
    9. Tin-Chun Lin, 2007. "Economic Behavior of Restaurant Tipping," Economics Bulletin, AccessEcon, vol. 4(2), pages 1-10.
    10. Ofer H. Azar, 2020. "The Economics of Tipping," Journal of Economic Perspectives, American Economic Association, vol. 34(2), pages 215-236, Spring.
    11. Lynn, Michael, 2015. "Service gratuities and tipping: A motivational framework," Journal of Economic Psychology, Elsevier, vol. 46(C), pages 74-88.
    12. Na Young Lee & Stephanie M. Noble & Dipayan Biswas, 2018. "Hey big spender! A golden (color) atmospheric effect on tipping behavior," Journal of the Academy of Marketing Science, Springer, vol. 46(2), pages 317-337, March.
    13. Tobias Regner, 2005. "Why Voluntary Contributions? Google Answers," The Centre for Market and Public Organisation 05/115, The Centre for Market and Public Organisation, University of Bristol, UK.
    14. Azar, Ofer H., 2007. "Why pay extra? Tipping and the importance of social norms and feelings in economic theory," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(2), pages 250-265, April.
    15. Amir B. Ferreira Neto & Adam Nowak & Amanda Ross, 2017. "Do tourists tip more than local consumers? Evidence of taxi rides in New York City," Working Papers 17-14, Department of Economics, West Virginia University.

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    More about this item

    Keywords

    Tipping; History; Social norms; Feelings;
    All these keywords.

    JEL classification:

    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
    • J00 - Labor and Demographic Economics - - General - - - General
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • D10 - Microeconomics - - Household Behavior - - - General

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