Tipping is everywhere — and consumers aren’t pleased. In a recent Pew survey, Americans revealed that tipping now feels like an obligation rather than a personal choice. This phenomenon, often called “tipflation,” has led to growing frustration among consumers.
Still, even if consumers are irritated, they’re not pushing back with their wallets. In fact, a recent report suggests that the average American is tipping about 4% more than they used to.
So, what gives? Why are consumers tipping more if they’re so fed up? The answer lies in our stubborn willingness to follow default options — a powerful influence, especially when tipping has largely shifted to digital platforms. These platforms, with their carefully designed default options, make tipping almost unavoidable.
Psychologically, consumers tend to accept default options. Decades of research has found that people tend to make decisions based on how choices are presented to them. Tip screens that present tipping options have a strong anchoring effect, making the choice for consumers one of how much to tip, rather than if they should tip at all.
Suggesting higher tip amounts is also effective. A study found that higher tip defaults can lead to higher tips from consumers.
What does this mean? Even though consumers oppose default tip amounts, they still tip more when using digital platforms.
Defaults aren’t inherently good or bad. Richard Thaler won a Nobel prize for his work on defaults in the context of retirement savings. By making participation in retirement savings programs the default, individuals are more likely to save important dollars towards retirement. The result is billions saved by millions of Americans.
But, defaults in the context of tipping feel different, at least to consumers. People don’t like the feeling of losing their autonomy when tipping. Even when people decide not to tip, they may feel ashamed or guilty.
Still, defaults aren’t a foolproof tactic. Some research suggests that higher tip defaults lead to lower customer satisfaction ratings. In a field experiment, customers presented with high tip defaults gave lower satisfaction ratings than those presented with low tip defaults. When presented with higher tip defaults, consumers may develop increased expectations for service that aren’t always met.
Especially in light of plans to remove taxes on tips, tipping probably isn’t going anywhere. Will consumers reject these defaults? Probably not, but time will tell.