Tipping is not a city in China 1

This week we are happy to post some new Tourism Economics research. Prof Melville Saayman of the TREES research area has a new paper out called “To tip, or not to tip?” and we knew that economists would also be interested.

When you study tipping behaviour there is a range of questions to look at: what is the economic value, it involves a specific section of the labour market, why do people tip, or why don’t they, should a service charge be included in the bill, should we ban tipping?

In a first for South Africa Prof Saayman’s team surveyed people dining out during the 2013 Aardklop festival. Previous research has shown that visitors spend a significant amount on restaurants and dining out during the festival. The questionnaire was based on research that had been conducted by Lynn (2006) and Azar (2010), and consisted of three sections: Section A gathered socio-demographic information such as gender, age, income, where they come from (place of origin) and occupation of respondents. Section B asked questions about the aspects that influence tipping such as the waiters, restaurant and dining party. Section C asked people about the reasons why they tip and do not tip. The survey was conducted from 25-28 September 2013 and ten restaurants that cover a variety of menus were selected. Fieldworkers then distributed ten questionnaires per day at each restaurant for four days. From the 400 that were distributed, 374 were used in the analysis. The analysis involved principle component analysis of the different reasons why people tip or not and analyses of variance in tipping by demographic information. The results are quite interesting.The PCA grouped the different factors that influence tipping together as shown in the table:

Tipping PCAIt is clear that the attributes of the restaurant and the waiters play a role and are grouped together in factor 1. Factor 2 represents the nature of the service received. People who indicated that the size of the bill matters, also said that they tip more when they pay with a card. Those that tip a flat rate were also likely to think that the tip should be included in the bill.

People were asked they reasons why they will give a tip and these include contributing to the waiter’s income, the service received and what the other people around the table think.

People said that they will not tip if the service is bad and there were those that believe the waiter is already getting a salary.

You can see how these results echo the Reservoir Dogs.

So who are the better tippers?

  • Men tip better when they like the restaurant and/or the waiter.
  • Women are more likely to worry that the waiter needs the money.
  • People who always tip, tip more when the service is good.
  • Those that only sometimes tip are the ones that give the flat 10%.
  • Professional qualifications and higher incomes are associated with bigger tips.
  • The people that eat out frequently feel the social pressure to contribute to the tip.

Prof Saayman promises that there is more research in this field still to come.

If you want to learn more about U.S. studies on tipping, listen to this excellent Freakonomics Radio podcast.


One comment

  1. Pingback: 2014 blog round up « Skool vir Ekonomie

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