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Nearly 60% of Americans never tip their Uber driver: study

Zack Guzman
Senior Writer

When it comes to tipping, Uber drivers are getting stiffed.

That’s the takeaway from a new study posted by the National Bureau of Economic Research that looked at 40 million Uber rides across the United States.

The study found that among riders completing at least 10 rides, about 60% never tip. Among riders that did leave a tip, the average tip came to just above $3 dollars, or about 26% of the ride fare. Including rides without tips, that average falls to just 50 cents.

According to the paper’s lead researcher and former Uber employee Bharat Chandar, part of the reason why riders tip so infrequently might have to do with the custom not always being built into the platform from the beginning.

According to the study posted to the National Bureau of Economic Research, nearly 60% of Uber riders never tip. For riders that did leave a tip, the average tip was about $3, according to the study.

“This could be a consequence of different norms and cultural expectations in the two settings — Uber did not encourage riders to tip in the earlier days of the app,” he wrote in a blog post discussing the study’s results. “It could also be because the tipping decision is made privately on Uber after the ride is over, whereas in many other contexts the tipping decision is more public, adding social pressure to the decision.”

The study was unique in the sheer size of its dataset, which included info on 40 million rides from all over the U.S. during the summer of 2017 after Uber shifted to allow riders to tip drivers. (The paper’s researchers included two former Uber employees aside from Chandar, including a former chief economist, who both jumped ship to join ride-sharing rival Lyft.)

The study also found that men tipped about 12% to 17% more than women, on average, and suggested a strong correlation between rider rating and providing more in tips. Male riders were also more seemingly impacted by the age and gender of the driver when it came to deciding what tip to leave.

“Men tip younger women about seven cents more on average than older women (roughly a 14% increase, give or take), while they tip younger men about 3 cents more than older men,” Chandar wrote. “Female riders tend to not vary tips as much based on the age of the driver.”

The average expected tip for Uber drivers declines as the age of the driver increases, according to the NBER study. (Bharat Chandar)

Interestingly, the study found that female drivers were tipped about 13% more on average, driven mostly by a higher percentage of trips receiving a tip (women received tips nearly 10% more often than men.)

Tipping bias

That finding echoes the reason Uber previously cited for refraining from adding tipping as a feature for riders when it first launched. The company published a post on blogging site Medium in 2016 that defended that decision by noting that adding tipping to the platform could result in drivers receiving unequal compensation for the same amount of work, due to a “personal bias” on the part of riders.

“Whether consciously or unconsciously, we tend to tip certain types of people better than others,” the company’s post said. Uber eventually made the change to allow riders to tip in 2017.

“In just over two years, drivers on Uber and delivery partners on Uber Eats have received nearly $2 billion in tips-- on top of their earnings. This feature remains one of the most popular among riders, drivers, and delivery partners. We’re committed to developing and improving features that help detect and mitigate bias on our platform,” said an Uber spokesperson in a statement to Yahoo Finance.

Noting that it has been two years since the time period analyzed, the researchers noted that tipping behavior on the platform may have changed over that time. However, the study also found that tipping was negatively correlated with more experienced riders. For example, riders clocking 15 lifetime rides or less tipped nearly 25% of the time, and averaged a $3.34 tip. In comparison, more experienced riders (those clocking more than 275 lifetime rides or more) tipped just 8% of the time, and when they did, the tip only averaged $2.69. The takeaway? Riders tip less as they take more Uber trips.

Provided that finding has less to do with the fact that tipping was a relatively new feature during the window of behavior studied and more to do with Americans becoming more comfortable with not tipping their drivers, it might not bode well for drivers looking forward to tips.

As Yahoo Finance has previously noted, tipping is a very contentious subject for tippers just as much as it is for those hoping to receive them. Due to federal labor laws that allow many tipped workers or contractors to be paid less than minimum wage, many tipped workers wind up depending on tips to make ends meet.

With California being the first state to challenge the idea of Uber classifying drivers as “contractors,” it will be interesting to see how Americans’ views on tipping drivers might change if more states force ride-sharing companies to pay drivers like they do employees.

Zack Guzman is the host of YFi PM as well as a senior writer and on-air reporter covering entrepreneurship, cannabis, startups, and breaking news at Yahoo Finance. Follow him on Twitter @zGuz.

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