Tipping Point

Been to a couple of restaurants with my mom while she is visiting. Coming from the Philippines where tipping is not really part of things, she still had to adjust to seeing me leave money for the server. In the Philippines it's not just done (well it is, but not in a mandatory "you have to leave 15-18%" way). That's because servers there do not get the bulk of their income from tips. Not like here in the US where the basic wage rate for servers are low, such that they have to rely on tips a lot.

There is a rich literature on the economics of tipping. Tipping is seen as providing incentives for the server to provide better service. He/She works for the tip by making sure the customer is satisfied with the food, drinks refilled every now and then, and asking from time to time if they are doing fine (kinda annoying if you are in the middle of swallowing a big morsel of steak :) ). Restaurant managers use tips too to motivate employees, they are also able to track down performance of servers, and measure customer satisfaction with the level of service. The economics literature has some evidence that tips are higher when the server is female, when drinks are consumed, number of items served is higher, and when the dining party is bigger.

You would expect that restaurants with servers that rely a lot on tips would have better service compared to those restaurants where no tipping is allowed. But this is not necessarily true, especially in the case of Philippine restaurants. I've had some of my best dining experience there without the explicit incentives from tips. Now that deserves a tip.