Pick your taxi wisely

This article is brilliant. It starts by being skeptical of a Bloomberg Business article showing how the most common tip amounts are 20%, 21% and 22%, with 19% strangely unusual.

Any NYC taxi rider would expect 20% to be the most common. The credit card touch screen in the cab gives you three one button tip amounts and the option to manually enter amount. The one button amounts are 20%, 25% and 30%.

Unless you are rich or you just told your driver, “I’m late for my flight, get me to LaGuardia as fast as possible”, you press 20%. Even if you were thinking 15%, pressing 8 extra buttons and doing the math just isn’t worth the 47 cents you might save.

But why is 21% popular? And the study showed that the average tip increased after 4PM. The article quoted a taxi spokesman who basically said “in rush hour people appreciate cabs more”. No indication why this is only true in the evening rush hour. And are you really saying that at 4:01 people suddenly feel like pressing 8 extra buttons to tip 1% more? Please. Again, the initial study showed that 21% was the second most popular tip amount, not an overall average of 21%. Seriously, who tips exactly 21%.

So someone calls BS on the article and digs into the data. NYC has been very good about making data open. You should read the article, but basically he figures out that there are two different software versions in NYC cabs. One of them calculates tips on fare only and the other calculates on fare+surcharge+toll. From 4-8 PM there is a surcharge added to the fare. If you don’t take that into account in your tip calculations, people are suddenly tipping 21%. If you do, you see a chart like this:

Which is exactly what any NYC person would expect.

There are two lessons to be learned here. First, question the data. Second, if you drive a cab in NYC, get one that calculates tip percentage generously…

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