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April 9, 2014

So you think you’re generous because you leave the waitress 15% and give the bartender a buck for your round of drinks? Sorry, but that makes you a complete cheapskate.

Blame our increasingly service-oriented economy, or technology that lets you swipe instead of digging out cash to pay for everything from a cab ride to a cup of coffee . Either way, the bottom line is the same: If you’ve been tipping the way you have since cell phones flipped open, you are a horrible tipper.

Now, this might not be your fault. Maybe you honestly don’t know what you should tip people these days, or who should get a tip and who should just get a, “hey, thanks.” The norms of tipping have shifted considerably over the past several years and, since most of this stuff isn’t written down — except for the restaurants that now give you a breakdown of how much 15%, 18% and 20% equals right on your receipt — that can make for a lot of guesswork.

In a post titled, “Everything You Don’t Know About Tipping,” blogger Tim Urban of attempts to eliminate that guesswork. He canvassed more than 100 service professionals — from bartenders to bellhops — in New York City, aiming “to capture a wide range, from the fanciest places to the diviest,” and shed some light on how these workers are tipped today (h/t Business Insider).

Urban then breaks down how much poor, average and good tippers pay, along with how much of these workers’ pay is dependant on tips. For restaurant wait staff, tips can be up to 100% of their take-home pay, and Urban categorizes 17% to 20% as an average range for tipping these workers.

“The sense I get is that 15% is now considered too low,” Urban says. For other professionals whose tips generally reflect a percentage of the service price, his results were similar. “Nobody expects more than 20%, but I got the impression that 15% is very low,” he says.

Since his research was all conducted in pricey Manhattan, Urban hypothesized that maybe the local economy was dictating a higher level of tipping, but national data from credit card-processing start-up Square finds that tip amounts are higher across the U.S., although there are regional differences.

According to the Square data, only one state doles out an average of less than 15% (Delaware), and people in 32 states leave tips of 16% or higher. Overall, the company says about half of transactions on Square include tips, and the average tip is 17%.

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Michael McCall, professor and chair of the marketing department at Ithaca College, says there are a couple of reasons why tip amounts have crept up.

Technology has a lot to do with it. Companies are rolling out ways that make it easier to tip — and harder not to. Last month, Starbucks added a function to its popular payment app that lets customer add 50 cents, $1 or $2 to their bill as a tip. “You need to go through two steps to get rid of that tip screen. You have to tap twice to get rid of it,” McCall points out.

A growing number of big cities have outfitted their taxi fleets to accept credit and debit cards, and the tools generally include a prompt for a tip. McCall says as the use of cash declines, tips rise because people paying with cards tend to tip more.

But we can’t just blame companies and their sneaky tech tricks. Other reasons behind the proliferation of tipping have to do with our behavior as consumers.

For one thing, we’re pretty bad at math. It’s easier to calculate 20% in your head than 18% or even 15%, McCall points out. Plus, we have a weird preference for round numbers — a psychological quirk that leads us to round up. This is especially true if we’ve gotten a modicum of special treatment, which triggers a subconscious propensity to tip. Social scientists dub it the reciprocity effect. (That’s the reason those holiday-season solicitations for donations will come with a sheet of address labels or a coin affixed to the letter.)

“Culturally, things have shifted. Now there’s peer pressure,” Urban says. “It’s not regulated like the rest of capitalism… It’s just this weird cultural norm.

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