The Political Economy of the Itching Palm: An Analysis of Tipping Norms

In this paper, I conduct the first cross-national study of the political economy of gratuities. Existing efforts to explain cross-national variations in tipping either approach this topic from a social-psychological or an economic perspective. In contrast, I argue that the diffusion of American tipping norms contributes to cross-national tipping patterns and that visits by foreign travelers to the United States are the central path through which these norms spread overseas. Consistent with this argument, I find that non-immigrant admissions to the United States are strongly and positively linked to restaurant tipping rates. Further, increases in such admissions have spurred a rise in tipping rates. From the standpoint of the domestic political economy, various observers argue that patrons leave larger tips in poorer countries and countries marked by poor labor conditions. However, my results provide little indication that these factors directly bear on cross-national tipping patterns. Instead, the existence of a service charge constitutes the only domestic factor that directly affects tipping rates