Riding Through Rallies: Will You Tip More?

48 Pages Posted: 28 Aug 2023 Last revised: 30 May 2024

See all articles by Zhoupeng (Jack) Zhang

Zhoupeng (Jack) Zhang

University of Toronto - Rotman School of Management

Wanjiang Deng

National University of Singapore - NUS Business School

Ming Hu

University of Toronto - Rotman School of Management

Date Written: August 27, 2023

Abstract

Other than gig platforms' interventions, what does it take for customers to treat gig workers (e.g., Uber drivers) in a more caring manner? In this paper, we approach this question by examining the impacts of the 2020 Chicago George Floyd (GF) protests on passengers' tipping behavior in the ride-hailing marketplace. We collect the ride-hailing data from the Chicago Data Portal and deploy a year-to-year difference-in-difference approach to estimate the causal impacts of the GF protests. We find that the protests increase the probability that passengers will leave a tip as well as elevate the tip ratio (i.e., the ratio between the tip amount and the total trip fare) by 2.54 percentage points, which is equivalent to more than 90% rise given the base ratio being 2.62%. Nevertheless, this positive impact attenuates on trips with less exposure to protest areas, and it ebbs away 2 days after the protests concluded; the tip increase has not translated into any consequential improvement in drivers' incomes either. By comparing with the taxi market, we identify a relatively weak social norm of tipping in the ride-hailing marketplace as one critical driving force: on the one hand, the weak norm makes passengers tip a ride-hailing trip much lower than they would for a taxi, but on the other hand, it also leaves space for event-specific and market-based factors to weigh in and (at least temporarily) affect passengers' behaviors; we propose two such factors that are potentially at play during the protests: the passenger empathy effect and the resilient service effect. Interestingly, the empathy effect may have not only benefited Black drivers but also spilled over to other minority drivers or even White drivers. Our work reveals how social movements may reshape customers' behaviors as well as the limitations of such movements, and at the same time, also sheds light on the role platform companies shall play in fostering a social norm of tipping in the on-demand economy.

Keywords: Ride-Hailing, Tipping, George Floyd Protests, Difference-in-Difference

Suggested Citation

Zhang, Zhoupeng (Jack) and Deng, Wanjiang and Hu, Ming, Riding Through Rallies: Will You Tip More? (August 27, 2023). Available at SSRN: https://ssrn.com/abstract=4553134 or http://dx.doi.org/10.2139/ssrn.4553134

Zhoupeng (Jack) Zhang

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada

Wanjiang Deng (Contact Author)

National University of Singapore - NUS Business School ( email )

Kent Ridge Crescent
Singapore 119245
Singapore

Ming Hu

University of Toronto - Rotman School of Management ( email )

105 St. George st
Toronto, ON M5S 3E6
Canada
416-946-5207 (Phone)

HOME PAGE: http://ming.hu

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