We got the following e-mail from a reader. It is a great example of using Freakonomic thinking to make sense of an otherwise jumbled world:
The reader (who asked to remain anonymous)writes:
Thought I would send an interesting anecdote about incentives:
I go to the Starbucks in my office building twice a day for coffee. I bring a Starbucks insulated cup and most of the clerks get to know me. Apparently, though, even in the world of half-caf, double-shot, soy lattes, with only one pump, my coffee order is confusing. I rarely am charged the same price twice in a row. There is uncertainty, it seems, on the size of the cup I bring and the amount of discount I am supposed to get for bringing it. My best guess is that the proper charge is $1.68, but on any given visit, I am charged anywhere from $1.84 to $1.43.
There is a pattern, however. When a new clerk starts, I usually am charged a price in the higher range by that clerk. After a couple of weeks, the same clerk usually will charge me the right price. This seems reasonable;?cup sizes and discounts that only a few customers get take a couple of weeks to learn. But then, after another week or so, I start getting charged less. Is it my winning smile that has finally won over the clerk? I don’t think so. You see, whatever amount they charge me, I simply dump the change into the tip bin. I figure once they start remembering me as someone who gives his change as a tip, they suddenly underestimate the cup size or find additional discounts for me. To me it’s just a two-dollar cup of coffee every time, but it’s interesting to see the pattern emerge again and again.
Another question worth pondering from a Freakonomics point of view: why does our reader always put the change in the tip bin?
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The tip system, when conducted properly, allows for business transactions between the two people at hand rather than customer and establishment. A regular tipper (when recognized) will get discounts and freebies. As many employees don’t feel that companies really have concern for them. The constant tipper displays some degree of recognition that there is a person taking their order and not just a random “server”. Employees appreciate the recognition and thus single you out for any benefits possible. You, in their eyes, have become a person as well and not a random “customer”.
This brings to mind for me an interesting perspective. At some point perhaps the lines of who is the actual employer to the barista begin to blur.
If I were being paid by a large semi-faceless company one rate, and a nice smiling bunch of customers a higher rate. I would more than likely become preferntial to the latter.
Like loopholes, discounts are out there and can be quite easily found if one takes the time to look.
Change is a nuisance. And the transaction goes faster. It’s inconvenient to keep purse open and wait for change. Inconvenient for men to carry change. And if he/she thinks the proper charge is $1.68, then change is 20% tip.
Me always have trouble with change, me have no pockets! Also, change look like little cookies and that can cause big problems after a while. So me always put change in tip jar!
And going to the Starbuck’s ten times a week is a heck of a lot of change.
I think another question should be: Why do you Americans feel the urge to tip AT ALL?” I mean, do you get pleasure from paying an extra 20%? As a resident of Australia, I don’t think I’ve EVER tipped at all. Perhaps this would mean that clerks in Australia would have less incentive to give a discount.
Can someone explain the cult of Starbucks to me?
I don’t make a lot of money (this is not a figure of speech, in some years my income dropped into four digit territory), but I always tip. Less at counters and more in diners, but always. Why?
Perhaps I want to defy free market logic that reduces me to a self-interested rational decision-making machine that only lives for low prices.