Skip to content
Who's in the Video
Kabir Sehgal was a vice president in emerging market equities at J. P. Morgan in New York. He serves as an officer in the United States Navy Reserve, served as[…]

Kabir Sehgal, author of Coined: The Rich Life of Money and How Its History Has Shaped Us, has studied the phenomenon of tipping around the world, and learned that tipping is a complex social and psychological phenomenon.

Kabir Sehgal: When you look at the idea of money, so much of it is given by the norms and the rituals of a society. Look at America and when you go out to eat with your friends; how much do you tip when you go to dinner? Well, maybe it's 10, maybe it's 15 percent, but did you know that if you're seated outside on a nice sunny day, you're more likely to tip more money because the sun put you in a better mood. But if you're seated inside or if it's an overcast day, you may tip less money. So the whole confusion of how much to tip — you're not actually the one making the decision; it's your subconscious that's making that decision for you. So Americans' tip is a cultural norm. And so as you go across the emerging world and other developed countries people tip at different levels and that line of what to tip really reveals not just how much they value the service, but what's acceptable in terms of the gift economy, what's acceptable in terms of not too tipping too much. It reveals a lot about how people perceive money and obligation in countries around the world.

I know in some places when you give too big a tip, it implies that you're trying to shame the person saying like, "Listen I'm giving you so much money; shame on you for not treating me better." In some Native American communities, for example, they have a practice called a potlatch. And you would have a potlatch when there is a new king or new queen or new chief and they would invite all their friends and then they would start giving out all their goods, all these riches to their friends. It was called a potlatch and they're basically shaming people by lavishing them with riches, as is to say, "I'm so rich; I'm so affluent I don't even need this money." And so as you go into tipping culture sometimes the biggest insult you can give is too big of a tip.