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Published byNelson Willmon Modified about 1 year ago

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Tipping Types A Study of Statistical Discrimination in Restaurants

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What We Are Looking At Statistical Discrimination. Tipping Behavior in Service Industries. In particular… the Restaurant Industry. Research Question: Is variation in tipping behavior consistent with statistical discrimination by restaurant servers?

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The Literature Tipping Behavior & Statistical Discrimination Server performance has a significant, but very small, effect on the size of tips (Lynn, 2000). Two articles by Lynn (2003 & 2004) identify racial groups with tipping averages under the social norm. Mallinson & Brewster (2005) show stereotypes are often a result of positive self-image and negative other-image. Caution: self-fulfilling prophecy effect of statistical discrimination (Lippert-Rasmussin, 2007).

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The Data Demographic: Roseville, CA. Unit of Analysis: the host, or person paying the bill, of each table served. All observations strictly observational.

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Age and Gender Distribution

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Racial Distribution

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Tip Percentage Histogram

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Hypotheses & Model H 0 : β x = 0 H a : β x ≠ 0 Where X represents any characteristic theorized to have a significant effect on tipping behavior. Model: Statistical Discrimination Y i = β X i + ε i Where Y represents an unobserved characteristic and X is the observed characteristic.

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Regression Results

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Conclusion Observed characteristics have statistically significant, but very small, effects on tipping behavior. Considering the low r-squared, unpredictable variations will occur. Servers should only apply varied service levels on the margin, i.e. when constraints do not allow all tables to receive their highest level of service.

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