Why Does Tipping Still Exist? (Update)

It’s a haphazard way of paying workers, and yet it keeps expanding. With federal tax policy shifting in a pro-tip direction, we revisit an episode from 2019 to find out why.

• SOURCES:
  • John List, economist at the University of Chicago.
  • Michael Lynn, professor of consumer behavior and marketing at Cornell University’s School of Hotel Administration.
  • Uri Gneezy, economist at the University of California, San Diego’s Rady School of Management.
  • Danny Meyer, founder of Union Square Hospitality Group, and founder and chairman of the board of Shake Shack.

• RESOURCES:
  • "How ‘No Tax on Tips’ Will Affect Waiters, Drivers and Diners," by Julia Moskin (New York Times, 2025).
  • “The Drivers of Social Preferences: Evidence from a Nationwide Tipping Field Experiment,” by Bharat Chandar, Uri Gneezy, John List, and Ian Muir (The National Bureau of Economic Research, 2019).
  • “Design and Analysis of Cluster-Randomized Field Experiments in Panel Data Settings,” by Bharat Chandar, Ali Hortacsu, John List, Ian Muir, and Jeffrey Wooldridge (The National Bureau of Economic Research, 2019).
  • “The Effects of Tipping on Consumers’ Satisfaction with Restaurants,” by Michael Lynn (The Journal of Consumer Affairs, 2018).
  • “The Importance of Being Marginal: Gender Differences in Generosity,” Stefano DellaVigna, John List, Ulrike Malmendier, and Gautam Rao (The American Economic Review,  2013).
  • “Restaurant Tipping and Service Quality: A Tenuous Relationship,” by Michael Lynn (The Cornell Hotel and Restaurant Administration Quarterly, 2001).

• EXTRAS:
  • “The No-Tipping Point,” by Freakonomics Radio (2016).
  • “Should Tipping Be Banned?” by Freakonomics Radio (2013).