what difference does tipping make? (pt 1)

Aussie tradition is no tipping. Restaurant workers are paid at least the full minimum wage, somewhere around $15 US, and generally more.  

In the US, of course, we don’t just tip, but do so at wildly high rates and with the understanding that the whole livelihood of the server is up to us. I tip my good-sociologist 20% there.

This habit was so ingrained that I also tipped in Oz for awhile. Now that’s worn off and I only tip when service is exemplary. (Acclerating the assimilation is how high restaurant prices are here, as even without the tip I still often leave restaurants mildly dazed by how much we spent.)

What difference does American hypertipping vs Aussie no-tipping make for restaurants?  I have no formal data, but (1) I’m a licensed sociologist, (2) we eat out a LOT, and (3) this is a blog. So let me give you the skinny.

I’ll get the obvious difference out of the way in this post, and then I’ll describe some subtler and perhaps more interesting ones.

Restaurant service in Australia is palpably worse. Anybody whose eaten in many restaurants in both places and tries to tell you otherwise is either oblivious or an ideologue.

Oz servers are friendly enough. Restaurants often try to get by with fewer servers–since they are the ones paying for them. But the effort and expectations are different even when a restaurant is mostly empty.

Most obvious example for me: I often like a second glass of wine with dinner. In the US, you can count on being asked if you’d like another. Your server will even ask as though they are hoping you’ll say yes. Here, often as not, I have to actively pursue a second glass of wine. But of course, tipping means that wine in the US is effectively sold on commission, where here you’re just making more work for the server.

(Part 2 to follow.)

Author: jeremy

I am the Ethel and John Lindgren Professor of Sociology and a Faculty Fellow in the Institute for Policy Research at Northwestern University.

6 thoughts on “what difference does tipping make? (pt 1)”

  1. Lucky for you, there’s a lot of research on tipping. See here:

    http://tippingresearch.com/index.html

    And an entire bibliography here:

    http://tippingresearch.com/uploads/Tip_Bibliography.pdf

    The research basically shows that, among other things, tipping is discriminatory. It’s even associated with bribery!

    http://dash.harvard.edu/handle/1/9491448 (I don’t buy this)

    I’ve worked a lot in the restaurant industry, as a waiter, cook, and now part owner in restaurant. For our restaurant in Madison we’ve thought about getting rid of tipping. This is something some places in the US have done to good effect. I think this Slate piece by Jay Porter is quite good on the subject (he draws on the research in the second half):

    http://www.slate.com/articles/life/culturebox/2013/08/tipless_restaurants_the_linkery_s_owner_explains_why_abolishing_tipping.html

    One the challenges is the price; you have to charge 20% more than your competitors. And even though the customer is paying the same amount in the end, the price they see upon purchase is considerably more.

    Why is service worse in Australia? Well, it could just be that you’re used to a different kind of experience in a restaurants than Americans, and when the server doesn’t provide that kind of service you think it’s bad. But if others came to the US they would find service “bad” too (it can be ridiculously invasive). Another explanation is that this has nothing to do with tipping, but with the culture of the service industry. I’m generally not a fan of “national culture” explanations. But I’m curious, when you walk into a department store in Australia, are there legions of people asking you about your day, if they can help you, etc? Because there are here. And those people aren’t being tipped.

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    1. Thanks. I’m off to bed here, but this looks like a great set of links. I’m looking forward to looking at it, but, lo, not tonight.

      I’ll think about it some more. It’s of course possible that other people who came to the US would find our system different and invasive. But, as I might mention in my next post, at the high end in Australia, they do act more like American servers (and they do seek and get more tips). So, I don’t know–it seems like people here think the attentive service is better, it’s just an expectation you only have at the high-end.

      But you are right the department store culture is different as well. I’m not sure if that’s a service culture thing, or if it’s a number of people that they have employed thing. These places seem more sparse, but I assume that’s due to the higher wages leading them to employ more people.

      If you see a way we can make a cross-national research project, let me know, as I’m into this place as a field site for the long haul.

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      1. I think labor market conditions could be really important here. While living in Madison I found that service was pretty bad. My assumption was that getting fired wasn’t really prohibitive for servers, as they could likely find a job really easily. This had a secondary effect on employers, who knew that firing wasn’t as much of a sanction if finding a new position was relatively costless for employees. But at the high end (where people can make a lot more money), the market isn’t as big, the networks are smaller, and so the costs are greater. In that case, you’d expect quality of service to decline with employment rates, except at the top of the distribution. But I’m not sure that’s the case. I wonder about within case variation as a way to explore the “service culture” idea. Are the regional differences in the US that great in terms of service quality? Excited for part 2!

        And sure, I’m down for a cross-national research project. Shall we apply for funds to eat our way across a variety of regions in two nations? We can start it off this year at ASA… you going?

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    2. Wow I had no idea that bibliography existed, thanks. Many retail sales people in America do work on commission, which is analogous to being tipped on a percentage of the sale. But I’m with you on it being about culture too.

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  2. I used to think about this a lot when I was tending bar and getting my UG in economics. The interesting Q’s I think are: who makes more, controlling for individual level characteristics, business size, etc.?

    Why did tipping persist in Toquevillian America and disappear in Britain and Europe? It’s a historically aristocratic practice (fancy places still have a hierarchy of servers with “captains” and “assistants” — sounds like the professorate!).

    Tangentially, there is evidence that the persistence of tipping customs is correlated with government corruption, which is unsurprising if you think about it — tips are essentially bribes (but then again, anyone who’s read Coase realizes that most economic payments are indistinct from bribes). http://dash.harvard.edu/bitstream/handle/1/9491448/Here's-a-Tip_Torfason,Flynn,Kupor-Tipping-and-Bribery-6-6-12-SPPS.pdf

    It’s also not clear why bar and restaurant owners put up with bartenders giving away free drinks for larger tips. It goes on everywhere, and would indicate a principle agent problem, but most people only get fired for it if they get excessive about it. Not that that’s ever happened to me.

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  3. On the invasiveness of service in the US (I’m old enough to have observed the escalation in this, there is a sea change since the 1970s): (1) although its rise correlates with the increase in the proportion of a server’s income tied to tips (i.e. as the base wage stayed constant while the cost of living rose), I am well aware both from the uniformity of the server behavior and reports from people who’ve done the job that it is mandated by employers and is quite different from the older more personalized pattern of servers chatting up the customers and responding to customer cues about how they preferred to be treated; (2) I am very sad to report that “How’s that tasting for you?” has crossed the Atlantic and appeared in an upscale tourist-oriented restaurant in England.

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