Article Abstract
American consumers tip $36bn annually, predominantly using small sums of cash. Yet, little is known about how the denominations of cash affect tipping behavior. In contrast to existing findings on the spending of different denominations (i.e., the denomination effect), we posit that consumers are less likely to tip smaller (vs. larger) denominations (e.g., $1 in 4 × 25¢ coins vs. a $1 banknote) to the same total value. We term this the “denomination-tipping” effect and predict that it occurs because it is more embarrassing to tip with smaller denominations than larger denominations. Consistent with this prediction, we find across one field study and four online studies (N = 1402) that consumers are less likely to tip smaller (vs. larger) denominations, and that this “denomination-tipping” effect is mediated by feelings of embarrassment regarding tipping smaller denominations. Our findings add to the literature on how cash denomination affects consumers' usage of money in the context of tipping, and we provide practical guidance on how service providers can minimize the adverse impact of smaller denominations on tips to their service staff.
Journal of Consumer Psychology, August 2023
About the researcher
Jing (Jill) Lei is Professor of Marketing and Head of the Department for the Department of Management and Marketing at the University of Melbourne. Her main research interest is in the area of consumer decision making in contexts such as food decisions, financial decisions, and medical decisions. She has taught in institutions in the Netherlands, Canada, China, and Australia. She serves as an Associate Editor for Journal of Consumer Psychology and has published her work in marketing journals including Journal of Marketing, Journal of Marketing Research, Journal of Consumer Research, Journal of Consumer Psychology, Journal of Retailing, and Journal of Service Research, among others.