Tipping is mostly price discrimination and status

I don't really like the US "tipping culture", but I think that's just because I'm a minimalist geek who wants everything to be as simple as possible. Tell me how much something costs up front and I'll pay it.

But I don't think tipping is evil corporations trying to rip off hourly wage workers, and more tipping might actually be a net positive for the world. I responded recently to this post on X:

Tipping used to be a reward for exceptional sit-down restaurant service. In 2026, you turn around a self-checkout screen at a self-service kiosk to buy a pre-packaged $6 bottle of water, and the software defaults to asking for a 22% tip. Corporations aren't using point-of-sale tipping systems to reward staff…..they’re using customer guilt to subsidize low hourly wages without raising their base pay.

I said:

Tipping is a way to get rich people to pay more so poorer people can pay less. Or, cynically, a way for wealthier people to feel superior to the losers who poke the zero button.

Maybe when tipping started it was a reward for exceptional service, although I kinda think that's probably just what the rich people that did the tipping back then told themselves when it was really about demonstrating their good breeding and high status.

Today I think tipping is mostly a painless way for companies to implement price discrimination -- a way to charge a higher price to people who are willing to pay more. People who can pay more often do pay more because humans are status-conscious primates.

People usually have a very negative reaction to price discrimination; it tickles the unfairness detector in our brains when a person or company figures out we're rich and decides to charge us more, even if that means less well-off people are charged less (which is what happens in a competitive market; greedy corporations can't overcharge or a competitor will drive them out of business). Tipping makes the price discrimination voluntary and invisible.

I asked my research assistant (Gemini AI) if there are cross-country studies on how tipping-as-price-discrimination might show up in the dining out data, and here's what it said:

There is strong economic and behavioral research supporting parts of your hypothesis—specifically that tipping enables lower-income Americans to access sit-down dining and skimp on tips—though direct cross-continental studies comparing dining frequency specifically by income class are rarer.