ARNOLD KLING
August 14, 2011
The Top Political Contributors
August 11, 2011
Gender and the New Commanding Heights
August 11, 2011
Jamie Galbraith Makes an Assumption
August 11, 2011
Macroeconometrics: The Science of Hubris
August 10, 2011
Real and Nominal Bond Yields
BRYAN CAPLAN
August 14, 2011
The Effect of Thumb Sucking on Income
August 12, 2011
The Voice of Cold, Hard Truth to All Would-Be Educators
August 12, 2011
Ability, Morality, and Prosperity: A Paper and a Report
August 11, 2011
The Theory of Time and Frittering
August 10, 2011
Male Variance and the Remnants of the Gender Gap
DAVID HENDERSON
August 9, 2011
Hayek in "Unbroken", Part Two
August 8, 2011
Hayek in "Unbroken"
August 5, 2011
James Bovard on the Peace Corps
August 4, 2011
Summers Way Off on FDR and 1941
August 3, 2011
The "Amazon" Tax
SHARE
"This indicates to Friedman that most people in reality don't get carried away with the economic benefits of free riding and neglect public goods when a developed social rule dictates that we should to the right thing."
Doherty seems to say here that tipping is "the right thing" independent of a social rule. Why is it the right thing to do?
Tipping a cab driver is not a reward for personal service (which would be a private good). It is payment for the services of vacant cabs, which is a public good. More vacant cabs mean a shorter waiting time to hail a cab, which is a public good. Lindahl prices of vacant cabs (tips) can induce efficient entry in to the taxi industry. David Freidman is right to call tipping a cab driver an example of self-imposed, voluntary, Lindahl pricing of a public good.
What is "efficient entry" in an industry that is as regulated as the taxi industry? In New York you have to buy a medallion, which costs a lot of money. Entry is also far from free in other places, San Francisco, for example.
The IRS agent hanging outside my house is a taxi driver?
I tip my cab drivers just because that meant I didn't have to walk...