This blog is about how you can analyse information in the world to bring clarity and make better decisions by doing so. This post is about some thoughts on how difficult that sometimes can be! We all like to be nice and to reward people who are nice to us. So why is working out the right tip so difficult? Ideally you should be able to use tips to signal both good and bad service. I like the standard and well understood assumption in New York that 15-20% tip is expected on restaurant meals. I tip 0% or 5% to signal truly terrible service. 15-20% to signal service that was about what I expected and 25% or so to signal that they exceeded my expectations. I have a nice system that I'm happy signals what I want it to ... ... however, even in this simple case, I very much doubt that most waiters take my tip and really know what was meant by the signal! For example:

• When I tip 5%, am I bring deliberately unkind? Do I even know that 15-20% is expected? Am I just being 'cheap'?
• When I tip 25% am I signalling good service or am I just being flash with my cash? Did I think that was a normal tip?

So even in places we are familiar with, I believe that signalling what you want to signal with a tip is usually difficult. When considering how much to tip, I think you need to balance the following pieces of information at the very least. There is a lot of information there that you need to make a good decision!!!

• First, you need to base your tip on the tip that the person is expecting from you. This varies by industry (restaurant workers yes, shop workers no. Why?), type of establishment (don't tip in a McDonalds restaurant, do tip in somewhere with white table cloths. Why? Do tip in hotels, not in B&Bs. Why?), location (by city and by country. Why?) amongst other factors.
• If they are expecting 15% then you need to go to 20% or 25% to show appreciation. Is it ok to go below what they are expecting to signal bad service?
• Is the tip already included in the bill? We have all made the mistake of adding a tip on only to realise on the way home that it was already in the bill and we ended up tipping twice!
• Why tip as a percent of the bill? Does a waiter in a high class restaurant need four or five times the dollar value of tips that a waiter in a more downmarket place gets?
• What wage is the person paid? Can they live on their salary, or do they genuinely need the tips to make a decent wage? If so, the tip is not really a tip. Its really part of the bill. If its really part of the bill, then the service would have to be pretty bad to justify you lowering the tip from their expectation. (You might argue that doing so would be akin to challenging the price of the actual goods / service you received.)

When away from places and industries that we know, it is very hard to find out what is expected as a tip. And as such, it is very hard to deliberately signal and to avoid accidentally signalling! Ask any two people and they will give you different answers. Some examples:

• London taxis are, perhaps, the most expensive in the world, but offer perhaps the best trained drivers in the world. So what I consider reasonable for a tip probably doesn't mean much to the driver! I have lived in London for eight years and I'm not quite sure what the cab drivers actually expect by way of a tip!
• Do you tip maids at hotels? I spend a lot of time in hotels with work and I can't claim back such tips so I don't leave them. Am I the only person in the hotel to not tip? I honestly don't know. One hotel I stay in a lot has a more local feel. I know the staff and so I feel bad not tipping. But I keep forgetting, so every now and then I leave a substantial tip on the bed with a thank you note. Hopefully this makes up for the times when I don't tip? [Someone recently told me that they tip maids in hotels as an incentive not to steal their stuff or clean the toilet with their toothbrush. That is another concept not included in my diagram: tipping as 'protection money' to avoid being treated badly!]
• Do you tip the guy who takes your bag to your room in a chain hotel? How much? I have no idea. I try to carry my own bags to avoid the uncomfortable moment when they pause to see if I will tip and when I fumble through my wad of local currency I got from the airport ATM on the way and desperately try to calculate the exchange rate. Sometimes they insist on showing you to your room and its rude to not accept! Do you tip then?

In less developed parts of the world, it is even more difficult to know what and who to tip. And our inclination to be generous can easily be dangerous. In places you are not familiar with, I think the following is the minimum required to calculate an appropriate tip: For a start you are probably guided only by your guide book's view of what is 'expected'. Ask any two locals and you will get a different answer! There is the dangerous inclination to be more generous in local terms than you otherwise might be. "Why not just tip five dollars to the boy that helps carry your bags? Its nothing to me!" It is dangerous because you may well be giving that boy the equivalent of a week's wage for a local factory worker. In situations like this you create huge incentives for people to get close to tourists to get tips, rather than to learn skills and get more traditional jobs. Just think what this does to the local economy! But in such a situation you face the choice of looking stingy to the boy who is holding his hand out and to the people who are watching you decide what to give him, or being seen to be a big spending generous person. So its tough to do the right thing and give a tip that is reasonable in local terms rather than one that is reasonable in your terms. This also creates a whole industry of people whose very purpose is to do some small act and then guilt foreigners in to giving them a tip for it. In Marrakesh you will see the boys on the street who are seemingly stood around to help tourists lost in the maze of Souks. Show even the smallest glint in your eye of being lost and one will pounce. Even if you tell him you don't need help and don't tell him where you want to go, he will walk in front of you to your destination and when you get there, he will very vocally demand a tip of a few dollars for taking you there. They are a nuisance created by the lure of what we see as small tips. Who can refuse a few dollars of tip to a kid who has his hand out and is beginning to be an embarrassment to you by insisting that you owe him a tip for showing you the way? What do you think? Am I over-analysing? Is there a simpler way to ensure you tip the right amount without all the worry, above?