Do people tip more in groups? - A review of the rideshare industry.
- danielwu779
- Mar 25, 2024
- 2 min read
Tipping is becoming an increasingly prevalent phenomenon in the 21st century. It is customary to tip workers such as servers, bartenders, hairdressers, parking valets, taxi drivers, and tour guides. Despite individual tips usually being modest, the cumulative amount can be significant, constituting a substantial portion of some workers' income. Estimates indicate that in the restaurant industry alone, over $46 billion is garnered annually from tips. Moreover, historical data suggests an increasing economic significance of tipping over time: tipping norms have evolved from 10% in the late 19th century to 15% in the mid-20th century, and eventually to 20% by the late 20th century, particularly in metropolitan areas.
Similarly, another prevalent phenomenon in the 21st century is the increasing amount of individuals utilizing car-pool as a method of transportation. Compared to traditional methods of transportation, carpooling reduces the amount of traffic on the road and improves air quality. Car-pooling also brings along private benefits to the consumer, saving them money - pooled trips are almost always cheaper than private trips as the cost is split between individuals.
However, do these two phenomena correlate?
In the restaurant industry, it is a customary practice for tables with larger groups (typically ranging from 4-8, but dependent on the restaurant itself) to have a mandatory tip/gratuity fee. The logic behind this decision is that larger parties will often leave more "work" for the service team to attend to, hence a higher mandatory customary gratuity fee should be implemented to compensate.
It should also be noted that this effect should be similar in other forms of service for larger groups. Larger groups frequently take up more "attention" from the service provider. In the ridesharing industry, larger groups may require for the driver to spend more time cleaning up the vehicle after its usage by a larger group. In cases where a driver spends money on external commodities (eg. Bottled water) for the customer, a driver may also have to spend more resources on replenishing these commodities. Henceforth, it should make sense for the driver to earn more in tip in the case of a larger group.
However, unlike the case of the restaurant industry, this may not be all true. There is no customary legislation mandating a higher tip for rideshare trips which are pooled/have more riders.
Furthermore, tips also revolve around the interaction between the rider and driver. On one hand, a driver may have more striking topics to talk about than a larger group. On the other hand, as most car-pools are pooled with strangers, individuals may feel uncomfortable interacting with others, resulting in a lower tip.
Yet, riders are aware of the added inconvenience of a rideshare driver and will compensate for this in terms of tips. However, to what effect is the amount of tips affected? This should be interesting to investigate.
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