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Teaching "Tips": An Economic and Pedagogical Defense of Gratuities

  • Anthony Gill at the Mises Institute

Tags Labor and Wages

06/22/2017Anthony Gill

A few upscale restaurants in the United States recently have ended the practice of tipping their wait staff, preferring a fixed labor cost method of compensation. This attempt to change this long-standing cultural practice presents a fascinating opportunity to explore a variety of economic concepts including principal-agent problems, gains-from-trade, price discrimination, and cultural institutions designed to build trust.

Professor Gill argues that tipping remains an economically efficient means of providing quality service wherein restaurant owners, wait staff, and customers all benefit in a win-win-win situation. Furthermore, the norm of tipping also provides an excellent example to teach basic economic principles and foster classroom discussion.

Presented at the Mises Institute on 22 June 2017. Includes a Question-and-Answer period.

Teaching "Tips": An Economic and Pedagogical Defense of Gratuities | Anthony Gill

Note: The views expressed on are not necessarily those of the Mises Institute.

Contact Anthony Gill

Anthony Gill (Ph.D. UCLA; B.A. Marquette) is Professor of Political Science at the University of Washington, a Distinguished Research Scholar at Baylor University’s Institute for the Study of Religion, and former research associate at the Religious Freedom Project (Georgetown’s Berkeley Center for Religion, Peace, and World Affairs). He is the author of Rendering Unto Caesar (Chicago) and The Political Origins of Religious Liberty (Cambridge).

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