Why I Gave a $50 Tip on a $20 “Rideshare”

Yesterday, I gave a $50 tip to a Lyft driver and then, on the return trip, gave another $50 to an Uber driver.

I realize that saying this may sound like either “virtue-signaling” or sheer stupidity. What a wonderful person I must be! Or what an irrational decision-maker!

But I don’t think either act was motivated by selflessness or irrationality. Here’s why.

In the morning, I dropped my car off for service, and the dealership booked me a ride home from a Lyft driver. I estimate the fare paid by the dealer at somewhere between $20 and $30.

Because I didn’t have to pay for the ride and didn’t have to ask my wife to spend nearly an hour in her car coming and going, I thought I should give the driver a gratuity. But when I looked in my wallet, all I had was a single $1 bill and three $50 bills. A dollar tip would be an insult, and I considered asking the driver if she could change a fifty. I’m sure she’d have been happy to do so, but it felt mildly awkward. So I hatched a brilliant scheme – I’d just give her a $50 tip! From a classic economic standpoint, of course, this solution is anything but brilliant.

And then, on the way back to the dealer to pick up my car, I ordered my own ride from Uber, and the driver was a very pleasant woman who had a ready smile and delightful sense of humor. So I decided to give her one of two remaining fifty dollar bills in my wallet (this time, I knew the exact fare – it was $21.91).

Now, if you are trained in classical economics, you might actually be curious – what in the world could motivate such financially irrational behavior? And why, after having a day to reflect on those two experiences, am I still so delighted with my two decisions?

Well, here are four possible reasons and some research to back them up.

1. Altruism can relieve negative feelings. One of my first two publications in graduate school was a paper called “altruism as hedonism.” It was a test of a theory developed by my advisor (Robert Cialdini) – whose “negative state relief model” of prosocial behavior postulated this: When you are in a bad mood, you can make yourself feel better by helping others.

This is, according to Cialdini, because you learn to think of altruistic behavior as something that elicits rewards from others (as you grow up, your parents and teachers praise you whenever you share).

2. Altruism can make you feel good even if you’re not in a lousy mood. In previous posts, I talked about research by Liz Dunn (and colleagues) demonstrating that students who received $20 got happier if they spent the money on someone else rather than on themselves (see How to spend your way to happiness).

3. Altruism can raise your status. Mark Van Vugt and colleagues have done a number of studies demonstrating that people who act prosocially are awarded more status in their groups. This probably didn’t apply in this case because I would never see the drivers again, they did not belong to my groups, and at least the first driver did not even know my identity. But it’s worth keeping in mind as another reason to show off your benevolence.

4. The rich get richer, the poor work harder. I live a good life, make a decent living, and have a good job that I have remained in for several years after many of my colleagues retired.

Part of why I continue working is that I was, for several years, raised by a single mom who had a low-paying job and who received welfare checks (this was before child support was normative and my father was in prison).

I have a hard time understanding people who have taken government support at some time in their lives – for education, health care (for themselves or their elderly relatives), farm subsidies, or during a period of unemployment – and later complain about government spending on other people in unfortunate circumstances. I also have a hard time understanding people who oppose workers organizing for a decent living and benefits.

Altruism Essential Reads

Want to Be Happy? Help Other People

How to Foster the Value of Generosity in Your Children

In the 1970s, I was one of 25 percent of Americans who belonged to unions and (back then) made a decent living.

Today, only 10 percent of Americans belong to unions. A quick online search indicates Uber and Lyft drivers in the UK did unionize last year, but they are not permitted to unionize in the United States (they are “independent contractors”).

Uber drivers typically make about 52 cents on the dollar for a ride, despite the fact that they pay for the car, the gas, the tires, and the wear and tear on the engine and parts. After the expenses, the driver’s share is typically substantially less than that taken by the ride-sharing service, which charges the driver a booking fee and a commission fee – if you think the commission would cover the “booking fee,” you may not qualify as an entrepreneur, who is supposed to follow the “take as much as you can get away with” rule. Drivers of ride-shares also have to pay for their own health insurance.

Looking back, I would say my pair of $50 tips were mostly motivated by negative state relief (I had been having a bad week). But looking forward, I would say that economic disparity is the main reason why those of us who have the means should be more generous to those who are working hard to make ends meet.

What I’ve discussed above are what evolutionary theorists would call “proximate” explanations. At a deeper, more ultimate level of explanation, there is good evidence that our ancestors increased their fitness not by being selfish, but by being generous to other members of their groups (see Kenrick & Kenrick, 2022, and self-satisfaction vs. self-transcendance).

In any event, I recommend you try giving an extra-large tip some time this week and see if it doesn't make you (and someone else) feel good!