Why Do We Tip?

Some economists may argue that the billions of dollars a year spent on tipping are difficult to understand. After all, there is no requirement to tip. In a recent article Why Tip? An Empirical Investigation for Tipping Car Guards (Journal of Economic Psychology, February 2010), Stephen G. Saunders and Michael Lynn summarize potential reasons for tipping as: to increase the probability of good service upon repeat business, to reward good work, to redistribute income to service workers, to avoid societal disapproval or gain societal approval and to conform to internalized norms. Tipping hair stylists and babysitters clearly fits into the realm of increasing the probability of good service upon repeat business. Many people give larger tips for better service and lower tips for poorer service. In their study of tipping car guards, Saunders and Lynn find strong support for rewarding good quality, helping service workers and gaining societal approval as reasons for tipping