Dear Economist

What’s the best way of leaving a tip?

Dear Economist,

I have a parking spot in a local garage and want to tip the people who work there so I continue to get good service. Assuming I take the car out once a week, should I tip the attendant $2 every time or pay a lump sum of $104 at the end of the year?
GHD, New York

Dear GHD,

Classical economic theory suggests there is little to choose between the two options. However, recent advances in “neuroeconomics” are providing insights into the way that our brains process different kinds of reward. I asked the neuroscientist Ben Seymour, of University College London, to advise.

He counselled against both of your systems. The Christmas bonus will be diminished because it will tend to be compared with other income and outgoings, and both tend to be larger at Christmas. The regular income makes more sense, but Dr Seymour fears that if you are too predictable, the parking attendant’s brain will start to encode two dollars as “no surprise” and thus dismiss them. If you miss a payment it will seem like spite.

Other possibilities include a steadily rising tip, which the attendant’s brain should simply register as “better and better” – but this plan requires lots of change and can seem odd.

Then there is the “lottery” tip, where you offer the attendant a 1/52 chance each week of receiving $104. (Ask him to pick the Ace of Spades from a deck of cards.) Too shifty-looking, I feel – which is a shame, because many people tend to enjoy such gambles.

The ideal tip would combine security and the excitement of surprise. Why not tip him a dollar a week plus an extra $5 every month or so? Such a policy should maximise the appreciation of your behaviour. Perhaps it is no surprise that it is what most people instinctively do anyway.

Also published at ft.com.

7th of March, 2009Dear Economist • Comments off