One of the most prominent things about America's culture is its tipping system. Throughout the years, many Americans, especially low-income workers who work at restaurants or social and food services, relied on tipping in order to fully live. Tipping usually occurs when service is given. In one of research about motivation and behavior regarding tipping, Azar (2010) found that many Americans believe tipping is a social norm in the US itself. Other factors from the research also show that Americans want to show gratitude toward the service of workers, and they also realize that many of the workers depend on tips to stay alive.

Due to tipping being shown as a social norm, customers have a hard time choosing whether to tip or not due to the factors that have already been shown. Some restaurants even encourage customers to tip based on their own terms; one of the reasons is that they want their workers to be appreciated for their services. Azar (2020) stated that the social norm of tipping has become increasingly common, with customers having a hard time tipping the workers and the workers having a hard time paying for their rent and other costs of living.

Since the pandemic in 2020, many people have had a hard time adjusting to the new beginning, especially after the breakdown of the financial recession, especially in the housing market and overall the cost of living due to high unemployment after the pandemic. The biggest concern was economic stability, making transfers and government spending the most important focus of governmental intervention (Callais & Pavlik 2022). It is important to understand how tipping culture creates advantages and disadvantages after the economy goes into a recession.

The advantage of tipping as a research topic is that it is a relatively simple context and therefore it allows for interventions that may be difficult to do in complex settings such as the workplace. According to Azzar, he tries to examine if a comparison of tipped and non-tipped occupations supports this view. In other words, has tipping become a social norm in occupations where the customer has the largest advantage over management in the ability to monitor service workers. He also addresses the claim that tipping improves service quality and increases economic efficiency because it avoids costly monitoring of workers. He uses a simple model to show formally that tips can improve service only if they are sensitive enough to service quality. However, evidence in several previous studies suggests that the actual sensitivity of tips to service quality is very small.

Azar shows that tip percentages in restaurants and taxis increased over the years, suggesting that people derive benefits from tipping in addition to the desire to follow the social norm (e.g, impressing others or improving one's self-image as being generous and kind). He also did a voting, for example, asking people to mark one or more out of seven potential motivations for tipping. In the US sample, the percentage of people indicating each reason was as follows: I feel guilty if I don't tip - 60%; I feel embarrassed if I don't tip - 44%; Tipping in restaurants is the social norm in the US - 85%; By tipping I can show the waiter my gratitude for his service - 68%; Waiters get low wages and depend on my tips to supplement their income - 67%; if I won't tip, I will get poor service the next time I go to the same restaurant - 14%; if I won't tip, the waiter may yell at me - 4%. The high percentage of people who tip to show their gratitude has implications for business strategy.

Service excellence and income are directly correlated when there is a tipping system in place. Employees that are tipped are encouraged to treat customers well in order to maximize their chances of receiving a larger tip. As staff members attempt to go above and beyond expectations in order to earn more money, this can increase customer happiness. Although customers become more frugal and firms face higher competition during a recession, this incentive for exceptional service may be essential to the survival of service-oriented enterprises. Connection of tipping to other psychologically motivated behaviors is offered by Ruffle (1998), who finds a behavior that resembles tipping in dictator and ultimatum games. Tipping is also related to the gift-exchange behavior that was documented in many studies.

When demand is high and they deliver a strong performance, tip-paying employees may make more money. When possibilities present themselves, our flexibility enables us to maximize revenues. This flexibility lessens the impact of the recession by enabling employees to make more money during periods of high demand, which firms may experience during a recession. helps. Others have previously argued that economists believe that tipping exists because it is the most efficient way of monitoring and rewarding the efforts of service workers (Lynn & McCall, 2000a).

REFERENCES

Azar, Ofer. H. 2010. “Tipping Motivations and Behavior in the U.S. and Israel.” Journal of Applied Social Psychology 40, no. 2:421–457. doi:10.1111/j.1559-1816.2009.00581.x

Azar, Ofer. H. 2020. “The Economics of Tipping.” Journal of Economic Perspectives 34, no.2:215–236. Doi:10.1257/jep.34.2.215

Callais, Justin.T., Pavlik, Jamie.B. “Does economic freedom lighten the blow? Evidence from the great recession in the United States.” Economics Of Governance. https://doi.org/10.1007/s10101-022-00283-0

Lynn, M., & Michael, M. (2000b). “Beyond gratitude and gratuity: A meta-analytic review of the predictors of restaurant tipping. Working paper, School of Hotel Administration.” Cornell University.

https://ecommons.cornell.edu/bitstream/handle/1813/71348/Lynn97_Beyond_gratitude.pdf?sequence=1&isAllowed=y

Ruffle, B. J. (1999). “Gift giving with emotions.” Journal of Economic Behavior and Organization, 39, 399–420

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