When Given a Menu of Tipping Options, People Tip More

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Does giving consumers a menu of tipping options make them tip more? 

A working paper that looked at millions of rides from New York City Yellow taxi cabs from 2010 to 2018 found that the menu did result in higher tips—up to a point.

For example, when a menu presented three tip options, the average tip increased by about 11% compared with having no menu at all. But increasing the number of tip options beyond that didn’t cause riders to tip more than they tipped when there were three options.

People tend to use tip menus as a reference point or anchor, interpreting the options as indicators of what they should actually tip, says

Kwabena Donkor,

an assistant professor at Stanford University’s School of Business, the paper’s author and a former New York City taxi driver.

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The study found that 58% of riders chose to use the taxi cabs’ tip menus, though riders tended to opt out of using the menu when the calculations were easiest. For instance, when a cab fare was a multiple of $10, the study found that riders were less likely to use the menu. Specifically, 53% used the menu when the fare was $10, and 47% when it was $20.

In one part of the study, Dr. Donkor looked at what happened when the menu increased the three suggested tip amounts by 5 percentage points each, to 20%, 25% and 30% from 15%, 20% and 25%. Tips as a percent of fares increased to 18.84% from 17.45%, and total tip revenue grew by 8%. The share of riders who used the menu, meanwhile, decreased when the higher amounts were introduced: Menu usage fell to 47% from 58%.

“Setting a high default can be perceived as exploitative, leading to a backlash where passengers lower tips in protest,” he says.

Nevertheless, as the overall increase in the tips awarded suggests, the benefits of using the menu (avoiding the math and calculating the tip) still outweigh the negative effect of the higher amounts in the riders’ minds—at least for the tipping options suggested in the study.

For dining in a restaurant

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For valet parking

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Ms. Ward is a writer in Vermont. Write to her at [email protected]

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