Yellowstone Times

A recent study led by Omar Shehryar, a marketing professor at Montana State University, explores the ethical and moral dimensions of tipping in the United States. The research was conducted in collaboration with colleagues from the University of Vermont and published in the Journal of Business Ethics.

Shehryar explains that while customers aim to minimize costs and maximize benefits, tipping disrupts this balance. "Say you’re going to a bakery, and you pick up an $8 baguette, but then you’re paying $2 more on top of that. Economists are baffled by this," he said. The study seeks to understand why people choose to leave tips or not.

Unlike previous studies focusing on customer attitudes, this research centers on chefs' perspectives. Chefs were chosen for their ability to speak objectively about tipping practices as they are not directly involved in the process like servers or customers.

The study included interviews with 25 Vermont-based chefs and restaurateurs with a cumulative 471 years of industry experience. The findings reveal a complex tipping system that leaves dissatisfaction among chefs, servers, and customers but remains deeply entrenched.

One surprising discovery was that many customers might not afford dining out if menu prices reflected true meal costs. By relying on tips to pay servers, restaurants keep food prices artificially low but fear changing this system could cause "sticker shock" for patrons.

In the paper, one chef noted that "restaurants are being held hostage," having to choose between raising prices by 30% or maintaining current practices. Chefs also highlighted how some patrons exploit their power over servers' wages, leading to inequities based on factors such as attractiveness, race, and gender.

Shehryar pointed out that "good" tippers effectively subsidize "bad" ones. He emphasized situations where service has economic value beyond listed prices, such as delivery drivers working in adverse conditions.

"The onus is on the customer to acknowledge that there’s some value they are paying for," Shehryar stated. He argues that while consumers may view tipping as optional, economists might see it differently in certain contexts.

The study also examines how COVID-19 affected tipping behaviors. During the pandemic, tips increased for services involving direct human contact but decreased for food delivery. Researchers suggest frustration from lockdowns and inflation contributed to this decline.

Shehryar expressed interest in future studies analyzing tip coercion's causes and effects on consumer behavior. Regarding policy recommendations for tipping reform, he acknowledges no simple solutions exist due to cultural and economic norms ingrained in U.S. society.

“Like the chefs said, in the U.S., tipping is just tradition,” Shehryar concluded. “They have to find the most optimal way to run the business while not fundamentally challenging why tipping exists.”

The full paper is available at https://link.springer.com/article/10.1007/s10551-024-05720-0.