An economic approach to tips and service quality: Results of a survey

Abstract

Previous literature on restaurant tipping has generally found that diner assessment of service quality is a weak explanator of tip size. We argue that this finding is suspect because of two problems in the way service quality is measured. First, in these studies service quality measures are based on customer-supplied cardinal rankings of quality made after-the-fact. This falsely assumes interpersonal comparability of service. Second, quality rankings typically displayed very low variation because most diners reported service as having been good. If tipping is effective in promoting good service, low variation in quality rankings will result and quality will be an insignificant explanator of tips. We ask subjects how they would tip under hypothetical service quality scenarios e.g. when service is “satisfactory,” “very good” and “poor.” We survey 286 students at two universities in Minnesota and Alberta and find that service quality is actually a strong explanator of tips.