Tipping is a common social norm that offers interesting case study for economists to evaluate the true reasons behind tipping. Consumers will most likely see the discoveries just as fascinating. Most of the general population will tip their server and not contemplate the reasons as to why they tipped their server. Most economists argue that tipping is not economically efficient and consumers tip for psychological value. Others argue that tipping is a way of paying for exceptional service. There are also a small percentage of restaurants that have embraced a no-tip policy. This material will take a more in-depth look at the social norm of tipping utilizing factual information provided by numerous case studies, restaurant workers, and consumers. Ultimately these tools will be used to analyze the true reasons behind the social norm of tipping to provide a better understanding of this controversy. .
A tip, otherwise known as gratuity, is an amount of currency given to a service provider for service executed and projected. It is a social custom created within service type settings such as, waitressing, bussing, and valet parking. Jeanne Sahadi, author of Tipping Not Optional, notes tipping experts tipping recommendations range from 15 to 20 percent of the total bill. If the service was bad one should tip no less than 10 percent of the bill. According to CNN Money, How Much to Tip, the general standard is 20 percent of the entire bill for very good service; no less than 10 percent of the bill for poor service. There is no law requiring consumers to tip, yet consumers commit to the custom and its standards religiously. This creates interesting controversy over tipping, its fairness, and why consumers actually tip. .
A general standpoint is that tipping can improve service by compensating good servers and punishing the bad servers. Service providers depend on earned gratuities that consumers give for good service.