Tips, or gratuity, have been a controversial topic for a long time. Originating in Europe, exported to the United States, where it grew and got institutionalised, efforts to ban it started in the late 19th century in the US itself. Washington was the first state to ban it, followed by many others, until they revoked the bans over time. The tipping percentage has also increased over time, with the maximum at around 25 per cent.
There are economic, social, psychological, and cultural motivations for tipping. Both demand and supply factors have influenced tipping and its variance over time and across the world.
Researchers have established a positive correlation between tipping and bribery across countries. They also reinforce discriminatory divides based on racial, gender, and other factors. Replacing tips with a fixed service charge is increasingly being tried out. The results are mixed. In the meantime, tipping is threatening to enter new sectors and newer categories, including proprietary part-owners like gig workers of the modern era.
We examine these and other related challenges in this post on ‘To Tip or Not to Tip’.