14 August 2008

iTip

At Freakonomics: Is Tipping Really So Hard? Apparently the iPhone App Store features a rather large number of "tip calculators".

Is it really so hard to multiply (approximately) by .15? (Or some other number; I don't wish to debate the "correct" tipping percentage here.) I've always figured that the hard part of tipping is not the multiplication, but the knowing who to tip. For example, do you tip food delivery people? I do on those rare occasions that I get food delivered; they bring the food to your house, which you could argue is more work than bringing it to your table in the restaurant! Plus a lot of them pay for their own gas. But in reality, I don't get food delivered, because I know I should tip, but I don't want to. Do you see how this gets complicated?

However, I am better than average at math and worse than average at "social skills", so I hesitate to generalize from my experience.

But as some people have pointed out there, this gives you an excuse to pull out your iPhone. And it's also the case that it's basically the simplest application one could write that actually does something useful.

A bill-splitting calculator I can see being useful, in cases where the amount of food people ordered varies enough that people aren't willing to split it equally; although I personally would never be in a party that would need it, because I can do the arithmetic. (And yes, my friends know this, so on occasion they'll ask me how much they should pay instead of figuring it out themselves.) But I can't eat with everybody! But even a bill-splitting calculator suffers from the fact that the hard part of splitting the bill is not the math, it's remembering who ordered what.

19 comments:

Blake Stacey said...

Can the iPhone tell you what to do when everyone only has twenties and loose pocket change?

Isabel Lugo said...

That would be useful.

Unfortunately there's usually no solution there, other than asking for change.

But often what ends up happening is that you have to give one of the other diners your money and get some change from them instead of putting it directly into the pile that goes to the restaurant. If the iPhone could solve that problem, it would be useful. (Not useful enough for me to get one yet, though.)

unapologetic said...

blake, that makes me think I should use "Step Right Up" for a Sunday Sample in the near future...

And yeah, it's easy to multiply by 0.15 (0.2 to not be a cheapskate these days), especially because iPhone comes with a calculator program (now a scientific calculator when in landscape view). But what you're missed is that is is so hard to know that that's what "15% (20%) tip" means. Most Americans, I'd venture, don't.

Isabel Lugo said...

John,

at this point I would like to do a survey of Americans and find out whether they know that's what an "x% tip" means.

Unfortunately I can't, at least not in any quasi-semi-scientific way. I could ask people I know if they know what it means, but they're a very bad sample.

plam said...

So back in Montreal, where I'm from, restaurants were really good at giving each diner a separate bill. This is somehow extremely hard to do in the US. I don't get it.

Kurt Osis said...

YES!

Finally some topics I can shed some light on. 1) Being bad at math. 2)Splitting the bill 3)Jokes.

First, I would almost guarantee some of these tip calculators are a joke (actually a really funny joke would be for a waiter to create a tip calculator that tipped too high (ie you pressed 15% but it calculates 20%) and see if people even noticed) But anyway this totally remind me of the episode of Seinfeld (The Wizard) where Jerry buys his dad a very expensive PDA and his dad only uses it to calculate tips, i think that's about all the use my dad would have for a iPhone. I imagine at least one of these calculators must be in homage to Seinfeld.

2)In bill splitting situations the most monetarily efficient way to split as bill is ask for separate checks. If you split based on cost then people will consume more and seek to pay less than the cost of their meal, creating inefficiency. This is the classic economic of problem of negative externalities. However, if the goal is to maximize utility (personal satisfaction) the person who pays for the bill should rotate (assuming you eat with the same people regularly). This is because people feel the most psychological trauma associated with the difference between paying nothing and paying something. So the total utility gained by all of the people who don't have to pay is greater than the disutilty to the one person who does pay. there now don't say I never contributed anything here but my usual stupid blatherings

Third it is also possible people are just bad at math. I didn't realize multiplication was just another form of addition until I was in college... it never occurred to me to take 10% plus half of 10% to get 15% or that 17% was 10% and 7 1%'s. That is to say I thought people who could do multiplication in their head had just memorized all of those combinations, the way I memorized multiplication tables. What was the reason for my sudden revelation? I was doing investment banking interviews and interviewers were prone to throwing out random multiplications problems in interviews just to mess with you. "What's 3% of 2 billion or what whatever". I was under extreme competitive pressure all of a sudden to not be the idiot who didn't get an internship. Before (and after that) I have never needed to multiply anything when i didn't have access to calculator. I am very sure there are lots and lots of people in this country in a similar situation. Personally I blame my third grade teacher, if she had told multiplication is just another form off adding and shown me a technique for approaching the problems instead of giving me a table to memorize, then I would have actually learned something rather than just memorizing some facts.

Again, the math educational system is bassackwards (to me).

Anonymous said...

Umm... Kurt Osis, multiplication is a different operation from addition. (In pi*pi...what does it mean to say, 'add pi 'pi' times'?)

Anonymous said...

It means to add pi three times, plus pi/10 once, plus pi/100 four times, plus pi/1000 once, etc.

Joe said...

I'm hesitant to tip generously to food delivery people on the argument that they have to drive to your place. Most pizza places that I know have added a delivery charge for that very purpose. Sadly, the day of the $6 large one-topping pizza is gone. It is now $14.

Scott Carter said...

True Story: Big dinner: Math Dept hosting a Fields medalist; physics dept hosted by a Nobel laureate. Lots of people. Math dept people estimating the cut of each person. Physics department pulls out a caculator. Mathematicians trying to ensure the waiting staff gets a proper tip: Rowdy bunch, many Margheritas! Physicist having computed the share of each person in their party refuses to reveal total to mathematicians who are busy throwing tens and twenties in the pot: JUST TO AVOID STIFFING THE WAIT STAFF. I don't know what the final bill was.

Isabel Lugo said...

The Nobel laureate should pay, since the Nobel comes with a large cash prize.

Kurt Osis said...

Scott:

That is exactly what economists predict would happen. We economists would also say, if you want to avoid such situations, just be the person who orders the most expensive meal on the menu. That way you always end up paying less than the cost of your of your food. Of course everyone else has the same incentive. And people may tend to consider this type of behavior socially unacceptable and may seek to punish at a future date. So the strategy is most effectively employed when dining in a group of people you are unlikely to encounter frequently. Alternatively, you could order alcohol for the entire group which will keep them from remembering your strategy and punishing you in the future. It seems the physicists may have employed this tactic as well. (I knew there was a reason economists admire physicists so much). Really its just like a game of poker.

Richard C Haven said...

"Can the iPhone tell you what to do when everyone only has twenties and loose pocket change"

Check out scred.com: it allows a group of parties to take turns paying and tracks the running balance. It requires an equal split, which leads me to:

JUST SPLIT THE BILL. If the point is to eat with friends, don't fuss over a few bucks. If not, go for a walk instead dinner.

Cheers

Anonymous said...

Anonymous said: It means to add pi three times, plus pi/10 once, plus pi/100 four times, plus pi/1000 once, etc.

Great! That means when one says 2*1, one means: Add 1 once, plus 1/2 once, plus 1/4 once, plus 1/8 once, etc.

Kurt Osis said...

"Great! That means when one says 2*1, one means: Add 1 once, plus 1/2 once, plus 1/4 once, plus 1/8 once, etc."

I am bad a math, but "2.0000000000...*1" would be one 2 plus zero 2's plus zero 2's and so on

just like pi*pi is three pi's plus one tenth pi's, plus 4 one hundredths pi and so on.

The relationship between multiplication and addition is built into the base ten number system. (it seems to me). So i don't really understand your point, that irrational numbers have to be rounded to be written in our system?

Am I missing something? I usually am...

Kieran said...

Sounds all very complicated. Wouldn't it be easier if you all moved to a country where you don't have to tip. Like Australia! Great beaches too.

unapologetic said...

This is the classic economic of problem of negative externalities.

Except negative externalities are costs borne by a third party with no chance to directly affect the transaction. So unless you're suggesting that splitting the check by cost induces diners to consume enough that the kitchen runs out of food, I'm sort of at a loss for how this statement is true.

Kurt Osis said...
This comment has been removed by the author.
Kurt Osis said...

John:


The third parties are the other people at the table. The ordering transaction takes place between the individual diner (consumer) and the restaurant(producer). The other people at the table can't stop you from ordering the most expensive possible meal; all they can do is also try to order the most expensive meal themselves. If everyone tries to order the most expensive meal the table will consume a greater quantity of food than required to satiate them. The check will then be commiserate with each individual's consumption, but since everyone will have ordered more expensive food they didn't really want, the restaurant will make extra money (have a producer surplus). The diners however will have no surplus if everyone maximizes the expensiveness of their meal, because they will continue to consume as long as the cost they impose on others at the table is greater than their utility.