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> The tipper "feels" good about tipping This would be true if tipping was optional, rather than expected. But this isn't even close to how things work in the
by buzzerbetrayed 6y ago
> The tipper "feels" good about tipping
This would be true if tipping was optional, rather than expected. But this isn't even close to how things work in the US. In the US, you tip so that the restaurant can advertise lower prices on their menu. That's it. They tell you a burger costs $12, when in reality it costs $15. And if you decide to only pay $12 instead of $15 the restaurant just makes the waiter eat the cost.
- conanbatt 6y agoI think the economic analysis of tipping is pretty complex. Cash tips allow for a lot of tax avoidance, which makes a huge difference with payroll taxes. Also the price differentiation effect is very good for businesses, they increase revenues (not only the "split" between tips & wages)
- lotsofpulp 6y agoIt’s not complex, just price obfuscation, price discrimination, and tax evasion. All advantages for the seller and disadvantages for the buyer.
- conanbatt 6y agoThe state not collecting in the transaction is a benefit for both parties, because you can buy/sell at a lower price. Price discrimination means you can sell at a lower price to customers who might will not buy otherwise. There is no price obfuscation.