Do Tourists Tip More Than Local Consumers? Evidence from Taxi Rides in New York City

Abstract

Given the resurgence of cities as consumer centers and the importance of amenities, we revisit the differences in tipping in taxis between tourists and locals in New York City. Taxi service is an endogenous service; however, taxis also contribute to the demand and provision of other amenities. We compare locals and tourists who are theatergoers to control for education and income, as these factors are likely to affect tipping behavior. Using data from the New York City Taxi and Limousine Commission on yellow taxis, we identify tourists as those trips leaving from or going to a hotel and theatergoers as trips where the drop-off or pickup is near Broadway within thirty minutes of the beginning or end of a show. We find that tourists and theatergoers tip more than locals and nontheatergoers, and tourists who are theatergoers tip even more. These differences between tourists and locals may affect the allocation of taxis throughout the city and hence the provision of other amenities.