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 (economics.uchicago.edu/directory/john-list), economist at the University of Chicago.
• Michael Lynn (sha.cornell.edu/faculty-research/faculty/wml3), professor of consumer behavior and marketing at Cornell University’s School of Hotel Administration.
• Uri Gneezy (rady.ucsd.edu/people/faculty/gneezy), economist at the University of California, San Diego’s Rady School of Management.
• Danny Meyer (ushgnyc.com/team_member/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 (nytimes.com/2025/05/21/dining/no-tax-on-tips-b…)," by Julia Moskin (New York Times, 2025).
• “The Drivers of Social Preferences: Evidence from a Nationwide Tipping Field Experiment (ideas.repec.org/p/feb/natura/00680.html),” 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 (ideas.repec.org/p/feb/natura/00681.html),” 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 (onlinelibrary.wiley.com/doi/abs/10.1111/joca.1…),” by Michael Lynn (The Journal of Consumer Affairs, 2018).
• “The Importance of Being Marginal: Gender Differences in Generosity (voices.uchicago.edu/jlist/research/charitable-…),” Stefano DellaVigna, John List, Ulrike Malmendier, and Gautam Rao (The American Economic Review, 2013).
• “Restaurant Tipping and Service Quality: A Tenuous Relationship (ecommons.cornell.edu/items/042e8740-5c44-486e-…),” by Michael Lynn (The Cornell Hotel and Restaurant Administration Quarterly, 2001).

• EXTRAS:• “The No-Tipping Point (freakonomics.com/podcast/danny-meyer),” by Freakonomics Radio (2016).
• “Should Tipping Be Banned? (freakonomics.com/podcast/should-tipping-be-ban…)” by Freakonomics Radio (2013).

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