An excerpt from
The Christmas Bonus
Every year after Thanksgiving, merchants pull out their Christmas displays, the business section of the New York Times focuses on the retail picture for the year, children start actively campaigning to see Santa Claus, building supers suddenly become more visible, and doormen seem to improve their service. Most buildings start to sprout holiday displays, and tenants, especially newcomers to New York City, begin to experience a peculiar anxiety over how much the Christmas bonus should be. They don’t attack this problem without help, of course. The Times runs an almost annual article on the standard tip across the various grades of workers one might find in a building—super, concierge, doormen, porter. Local newspapers—the Spirit on the Upper West Side, the Resident on the East Side—join the fray and offer more specialized guidance. But strangely, rather than reduce anxiety, the apparent presence of norms for others simply heightens concerns. Leaving aside, for the moment, newcomers, whose ignorance allows them a certain freedom to commit social errors without approbation, talk about the Christmas bonus is reserved for close intimates—like income, it is more private than sex. As one tenant reports:
I never asked anyone. Why? We know people in the building, but the people I feel comfortable asking don’t live in the building. If I asked, I would worry that they would ask in return, and I am not sure I would want to share that. It would be for fear of being embarrassed that it is not enough—that I should do more. And I don’t want to have to think about that.
But at the same time, there is often also a strange undercurrent that runs through the buildings, an intensity of interest in exactly what one’s fellow tenants may be doing this year with respect to the bonus. So while it may be the Christmas spirit, one can also notice increased talk in the halls, by the elevator, and in the lobby (when the doorman is not around) between tenants often too busy at other times during the year to so much as acknowledge their shared presence in the elevator. They want to get to the issue at hand—how much to give—but it takes some social lubrication. So for a while, the buildings take on a cheerier and friendlier light. It is a means to an end, though—getting the right information? Perhaps, but giving the wrong information could also be more accurate.
The dilemma tenants face is clear enough. The expectation is that doormen ought to get a bonus. So should the super. The conflicts when one comes to think about them can often be deep. The bonus is never not multivalent in the eyes of tenants. It is both a gift, a way of saying thanks, an obligation, and yet also a sign of expected reciprocal attention and an expression of social power. These contradictory meanings make the bonus difficult to talk about, and tenants often squirm in their seats (or cognitively) as they try to describe just what it means. For example, one tenant in an Upper West Side cooperative moves in the space of seconds from describing the bonus as a gift—“and I like giving gifts”—to a vehicle for achieving attention, to a moral commitment, to social justice abstracted from the building entirely:
It also gives me more power. For a certain time of year, the help focuses on what we are doing. It’s nice for them, too, aside from the demeaning aspect, because it feels like free money. I feel good about it, but at the same time the whole thing is demeaning them. You get caught in the system, and you can’t find the owner and demand he give them a higher wage—the moral situation is unfair because we are the human beings. The burden is on me to help. It ought not be on one to rectify the situation, but it is.
There are two public ideas about the meaning of the bonus. They appear quite different at first glance, and alone, neither accurately captures the real dynamic that is going on, but it is useful to start with them because the trick of the bonus—the way the bonus works—is that it unifies two simultaneous perceptions of temporality. On the one hand, the Christmas bonus is often represented as the acknowledgment of all of the assistance received during the past year. Because the norm is to not tip for little favors that are, in any case, potentially a part of the job description, tenants think about the Christmas bonus as a giant summary tip of sorts. Whereas tipping encodes the relationship too starkly as a service relationship, because the number of small favors is endless, the Christmas bonus symbolizes the value of all the little services over the past year. Call this the straight-service or post-payment model. Doormen may also define the bonus as a summary tip, on a post-payment model, in whole or in part. Asked what he likes best about the job, for example, Michael says:
Christmas bonuses! Christmas, Santa Claus, Santa Claus is coming to town. You know why, not because we are greedy or anything; we service them well. Come Christmas they are supposed to take care of the service they have received during the year. Am I right or wrong? We give them good service; this is our time now. I know that in bigger buildings with a hundred and fifty-five units, these guys can make eight, nine, ten thousand dollars. Right here I make about four, but I know guys that laugh at me when I make four because they make eight. It’s not unusual for a tenant who likes you to give you a check for five hundred dollars.
Tenants also often think about the bonus in part as a post-payment for services previously consumed during the year. As the tenant quoted earlier who feels that the burden to provide a living wage should not rest on him says:
It’s a conflict. It means a nice gift and I like giving gifts, but for them it’s not a gift, it’s a chunk of their salary, so it’s not extra, it’s integrated into their wage, their expenses. At the same time, it’s fun to get a bonus—it’s potent psychologically. It’s less fun to have that money evened out.
One might think that if the bonus were simply the summary of not-given past tips, that individuals would not experience so much anxiety about the size of their gift. Those who could anticipate such anxiety could easily record the number of times each specific doorman helped with packages, delivered dry-cleaning, or called a taxi; decide what the appropriate tip for each service would be; and pass that sum, or some fraction of it, along at Christmas. But it isn’t so easy. Breaking the whole into its component parts is difficult practically. What would the appropriate tip be? And what are the “tippable” activities? More problematic, decomposing the summary bonus into a whole array of heterogeneous micro-services is psychologically as difficult as breaking down the minimum payment required on a credit card into the constituent purchases that compose it. Facing this, the post-payment model is often reported to be no more than a generic “thanks”—a bonus not tied to tied specific services—even if tenants often give different amounts of money to different doormen.
On the other hand, the Christmas bonus is often represented as a prepayment or down payment for the next year, an advance on the services to be received. Here the bonus is simultaneously a pure gift—for it is given in advance of service—and a hedge for service in the coming year. On the one hand, if this was the model, tenants could easily reduce anxiety by doing what the gas company does when it calculates your monthly gas bill for those months that the meter reader cannot gain access to the meter—estimate the number of favors in the upcoming year as a function of the number of favors received previously. Since tenants are in the best position to estimate needs, given expected changes in household composition, the only tenants with anxiety should be those new to the system. This prepayment model then appears to be the same as the post-payment model with a year lag, presuming that the doormen who work at Christmas are still likely to be serving one in November. But this is a narrow interpretation, for the pre- and post-payment models involve completely different psychological orientations and temporal foci. In fact, the trick of the bonus is that it is both a pre- and post-payment. It is easier to see this if we think first of tips and then move to their cousins, the bonuses.
the bonus as a temporal prism
Tips are given for services received in theory. I eat at a restaurant, where a waiter serves me. At the end of the meal—if social convention dictates—I pay my check and leave a tip for the service. At the hairstylist’s tips are expected, but there is no clear relationship between the value of the tip—as a proportion of the total bill—and the perceived quality of the haircut. I may need a taxi at the hotel. The doorman may signal to the waiting cab to come and get me. This service benefits the hotel by keeping taxis from clogging the entryway, yet I may still feel obliged to hand the doorman a dollar or two. Good service is theoretically rewarded with a higher tip, poor service with a lower tip, but as the latter case indicates, in many instances the client has no foundation from which to base assessment of service received.
Economists often find that tipping is a challenge to standard economic theory. The paradigmatic challenge is usually posed in the form of a question that appears in its starkest form when repeated visits are not expected, for example, in a roadside diner somewhere that the guest does not intend to ever come back to. Specifically, many economists wonder why consumers leave money for strangers when they are not required to, will not derive material benefit from doing so, and will not return to benefit from their tip. The simple answer that most people have to this question is that tipping is norm governed and that people most often behave in normative ways. This may be because violating normative behavior makes people feel bad or because following norms makes people feel good about themselves, or both. For whatever reason people tip strangers, the fact that they do so simply means that all behavior is not meaningfully treated as if it were economically rational.
But if all tipping is not rational, some tipping may be—especially in contexts where repeat visits are expected. One obvious idea is that people tip today in order to avoid bad service tomorrow. If seen in this light, the tip is not a payment after the fact for services received, but a prepayment on services to come. In this light, some tips are rational—those that are hedges for future services—and some are irrational—those that are simply normative responses to the provision of service. The bonus is a form of tip, but it is not just a tip. It is something better, and it is something better because it serves as a temporal prism; simultaneously a post-payment for services that were received and a prepayment for services that are to arrive.
pre- and post-payment and the psychology of the tip
People prefer most of the time to prepay for things they want to consume in the future. This preference is not rational. That is, it violates economic rationality. And so it creates problems for economists. The rational consumer should not want to prepay for services in the same way that he or she should not tip servers that they will never see again. In theory, if payments are delayed, the consumer gets a better consumption experience. And the longer the delay, the better it is. But most people do not follow this rule. The classic case is how people approach their summer holiday. If people are given a choice—to pay for the holiday in six monthly payments one for each month before the vacation or pay for the holiday in six monthly payments after the vacation, people prefer the former, even though it is irrational (it is irrational because they could invest the money they did not prepay and therefore earn interest, reducing the cost of their vacation). Why do they have this preference?
The general idea from behavioral economists is that people tend to evaluate both payment and consumption prospectively—that is, they look to the future, not the past. Consequently, most people would rather prepay first because at the moment they pay, the pain of payment is reduced by the idea of the vacation they are about to have and, second, because while they are on vacation they can enjoy it without thinking about the future payments that they will have to make. If they already paid, the vacation is experienced as if it were free. Paying after the vacation means that their enjoyment will be reduced by the thought of the unpaid bills waiting for their return. Worse, when they do pay after the fact, they have nothing to look forward to, no future pleasures wait to lessen the pain of payment—and so paying is experienced as if it were paying for nothing, as versus getting something for free.
Against this background, consumers thus have a psychological preference for prepayment. Since they have this preference, they may also have a psychological preference to think of some kinds of payments for services as prepayments. The tip for the hairstylist can be seen as a prepayment for the haircut to be received next month; the tip to the pizza deliverer can be seen as a prepayment for more rapidly delivered pizza next time; and so on. Even if the tip is rhetorically construed as a post-payment—a payment for a service already consumed—it can be experienced as a prepayment, as a hedge against future services if they know they will receive future services. The repeat tip—the rational tip—is a prepayment. It is a prepayment because the client considers the tip as a hedge against potential bad service. The bonus is a prepayment par excellence.
But prepayment as a preference runs into an awkward fact. Consumers would prefer—all things being equal—to never pay for items that they consume, or to delay payment for as long as they can, so that they can enjoy the consumption of the item without having to pay for it. Put more starkly, if people prefer to prepay, why do people use credit cards and prefer to use credit cards and buy more stuff when they use credit cards since credit cards are all about post-payment? How can consumers prefer prepayment and yet simultaneously buy more stuff when they can pay for it later? The behavioral economics literature has a good answer here too. Credit cards decouple the pain of purchasing something from the enjoyment of consuming it. Imagine buying something. No matter what it is, thinking about the future payments that one has to make for the thing that is bought will lessen the pleasure of consumption. But if payment is psychologically separated from consumption, the attenuation of pleasure caused by having to pay is reduced. Credit cards are the magicians of decoupling. They achieve this both by increasing the time period between purchase and payment (no interest or payment for twelve months) and by combining many purchases into a single payment (the minimum payment).
The credit card bill itemizes the items purchased. But the bill is for the total amount or the minimum payment. Because individual items are combined into the total (or minimum) amount due, the moment of payment is completely decoupled from the specific consumption act. As magical, the fact the one can pay for anything by credit card means that the typical credit card bill covers a wide spectrum of commodities. The more diverse the specific things consumed are—a dinner, a ticket, a new printer, some books, a visit to the cash machine, the hairdresser, and so on—the greater the decoupling, for the heterogeneity of items makes it impossible for the consumer to associate a specific item purchased with the specific payment that they are making. Thus, decoupling takes the pain away from buying and leads people to buy more than they would if they used cash. With credit cards, consumers get the pleasure of consumption without the pain of paying.
If tenants construe the bonus as a summary of the heterogeneous services that they have received over the past year, then the bonus is a decoupled post-payment. The specific elements that make up the value of the bonus are decoupled from the total paid. The heterogeneous services—packages delivered, doors opened, kids watched, taxis called, bags brought out, groceries brought in—are bundled together so that it is impossible to account for the value of any specific service. As one young mother of two children says about the bonus:
We make a decision about how much we can give, which is pretty much based on how much we can afford, how much we can give, and not what they have done for the past year. We don’t tip during the year, so it’s a thank you for everything you have been doing for the year. I don’t give different amounts. Everyone gets the same amount, except the super.
As important, the payment is temporally decoupled from the receipt of the service. Thus, the bonus is a decoupled prepayment, or put another way, simultaneously both a post-payment and a prepayment. It is a prepayment because it can be construed as a hedge, as a prepayment for services to be received; it is decoupled because it can be construed as a post-payment for heterogeneous services already consumed long ago. The temporal decoupling provides a vehicle for distinguishing the bonus from a tip, that is, from a routine expenditure. The bonus may be routine, but by temporal decoupling, it enters the world of social, rather than economic exchange, and can thus be construed as a gift.
The bonus rests discursively on the seams of two contradictory temporalities—the past and the future. How is this remarkable feat accomplished interactively? The interactive trick rests on the fact that the bonus is rarely acknowledged explicitly. Even if it is given at Christmas, it does not happen at Christmas. The bonus is the tip without time. As the tenant quoted previously who is torn between seeing the bonus as a gift or as moral obligation to rectify inequality says, his contribution is never acknowledged.
Around that time it seems they must have gotten it. You look for signs of people looking a little more flush. You can detect people acting cheated or misused. I don’t see this. There is an extra friendliness that lasts several weeks past the holidays. It’s never acknowledged explicitly, no; but I take that extra friendliness as an acknowledgment. But it could be, now that you have me thinking about this, just that this extra friendliness or extra pleasure or happiness has nothing to do with the tip—they need to reflect people coming in. So if people are acting happy in holiday time, they have to also.
His experience is not uncommon. Most tenants report that their cards are not acknowledged—or more precisely, that while their cards may be sometimes acknowledged, the money is not. Tenants are not unhappy about this, necessarily. The explicit acknowledgment of the money is awkward. It is awkward because the quantification of a qualitative relationship is too naked to sustain the ambiguity necessary to make the lobby “work.” If individual acknowledgment is rare, generalized acknowledgment is more common. Thus, in many buildings, especially on the East Side, tenants are greeted after the Christmas holiday with a public note by the elevator thanking them for their generosity. In one building, tenants give cards to doormen indirectly and are thanked en masse by such a public posting.
We put cards in a big box in the lobby, separate cards for each person. We get a “thank you” posted to all tenants by the elevator.
A box is not uncommon. On the one hand, it solves the practical problem tenants have of trying to find doormen to give money to, allows tenants to give money to unseen workers, the night doorman, as well as porters and cleaners who may work odd hours. And it solves the interactive tension of encoding the relationship through quantitative exchange right at that specific moment. The box (or other system for giving without interacting) allows the bonus to slip through time. The box facilitates a specific kind of timelessness—drawing the bonus into the social world. Equally so, the envelope and the card insulate the money from the profane world of economic exchange, helping to transform the cash into a gift, into something demarcated from ordinary exchange. And crisp new large bills unsullied by prior exchange help as well to distinguish the money in the bonus from regular money—and thus declare that this bonus is a gift, independent of instrumentality.
While the rhetoric of the bonus is that it is either a pure gift or is in some way keyed to service, either from the past or expected in the future, it is possible that the bonus has little to do with either. One idea is that the bonus is a signaling mechanism and that tenants and doormen use the bonus to signal and negotiate status. Consider the idea that tenants, concerned about their status in the building, fear making the kind of error that would lower their perceived position with the staff. Giving too little is obviously potentially damaging. Oddly, so is giving too much. The signaling takes place in a context where doormen know that tenants have only a vague idea of their annual salary and tenants know that doormen are aware of the relative value of the apartments they occupy. At the same time, the doormen believe that they have an accurate read on the incomes their tenants bring in, extrapolating first from the rent or sale price of the unit and secondly from the “lifestyle” they observe. Their read is generally biased upward. Since they most often observe the public side of everyday life, there is a tendency to read the public (arriving in taxis, dressing up to go to dinner or work, packages delivered, dry cleaning received, etc.) as accurately reflecting the private side. Tenants, on the other hand, tend to estimate doorman income as a function of their own income. Consequently, wealthier tenants’ estimations are significantly upward biased, whereas middle-class tenants tend to underestimate doorman wages. Further complicating matters is the general tendency that doormen have to elevate the status of their tenants, if only to subtly elevate the often inchoate sense that their job is in some ways more important than it might be if the tenants were just completely ordinary. At the end of the day, however insulated from the profane world of exchange, the bonus is a number—and something happens to relationships when money is exchanged.
Doormen of course prefer large bonuses. Tenants would prefer to give bonuses that are significant enough to make sure that the doormen and the super don’t consider them cheap, but not so large as to be wasteful or to appear tacky. Even if there were not a direct relationship between the size of the bonus and service provided (there is, but it is weak), and therefore tenants did not have to fear service withholding, most tenants would prefer not to occupy the lowest position in the bonus sweepstakes, all things being equal. This is also the case in numerous other contexts where rationality gives way to status concerns. Here, for example, tenants would prefer to give $50 and be in the middle of the bonus distribution than give $50 and be at the bottom of the distribution, even though the actual value of the gift remains the same. This preference, and the obvious mathematical fact that someone has to occupy the lowest position—it would be better if it were someone else—creates upward pressure on the bonus, pressure that is conditioned at the upper levels only by the fact that giving too much also carries risk. At the same time, tenants do not want to give $50 and find that they are on the top of the distribution. And this balancing act keeps things from spiraling out of control.
The closeness of the relationship means that excessive giving is easily interpreted as an attempt to transform an employer-employee relationship into a master-servant relationship. While one garners status from giving, for the bonus, as in love, too much giving can lower the giver’s status and delegitimize the intended meaning of the gift. Too large of a bonus carries an uncomfortable odor, so somewhere a balance has to be struck. The balance between too much and too little is derived from the distribution of other bonuses in the building, since the meaning of the gift is conditional on its position in the whole population of gifts—$500 means one thing in a building of other $500 gifts and quite another when the next largest bonus is $50. Tenants know this, although they rarely articulate it; preferring instead to rhetorically key the bonus to service. But this keying is a device, little more. It is a signal that is essentially local—having little currency beyond the building.
The optimal position for each tenant in the bonus sweepstakes is right at the top of the pile, but within close range of the others’. Little is gained from being in the middle; aside from avoidance of the bottom. The bottom quartile of the distribution is obviously exactly where tenants do not want to find themselves. The dilemma is that it is impossible to know how to position oneself without learning about the expected behavior of the other tenants. And this is why, around Thanksgiving, tenants start to position themselves to learn what their fellow tenants are intending to do. Eventually, they will have to start talking. The staff often facilitates the talking by sending a little card around the building, wishing the tenants a happy holiday season. The card often lists the names of the staff, their positions in the building, and not infrequently, their tenure. Tenants may use these cards as an invitation to strike up conversation with others, often indirectly and often focused on whether or not they (their new “friend” in the building) know one or more of the staff listed. This trick—asking if the neighbor knows one of the doormen—is more than a simple entrée to the conversation, since knowledge of doormen is a particularly valuable currency in the building, and not to be taken lightly.
(so-called) objective advice
Before conversation starts, tenants can always consult the New York Times or other newspapers for advice. They do so at their own risk, though, as the messages are not always clear. In 1965 the Times reported, “The tipping custom is the most confused thing that ever was,” quoting Ralph Guild, then vice president of Brett, Wycoff, Potter, Hamilton, specialists in apartment management. A paragraph later, they confuse the reader even more, writing:
In Manhattan’s luxury apartment houses it is not unusual for a tenant to give $100 to the superintendent and at least $20 to members of his staff, which consist of round-the-clock doormen, elevator men, handymen, and porters.
But then, a sentence later, they write:
[A] superintendent of a 150-apartment luxury-class building could receive $700 to $800 in tips at Christmas time, while the doormen could get $300 to $350, in addition to tips received the year-round for getting taxis and doing other favor[s] for tenants.
So, somewhere the math got very mixed up, unless one imagines multiple supers and a staff of more than fifty. Simple math from the first sentence suggests that the super should receive $15,000 in bonuses, and the doormen $3,000 to $5,000. Working back from the second sentence yields a different recommendation; assuming the same 150-unit building, each household should give the super $5 and the doormen $2 to $5 for the year. A typical family we discover, just a bit further on, living in a moderately expensive building on the East Side could expect to set aside $80 to $100 for Christmas tipping. In 2002 dollars, this would be roughly $400 to $500. With guidance like this, it is no wonder why people feel especially helpless, and even experts admit that the whole affair is “confusing.”
In 1972 the New York Times couldn’t help but notice that “a sense of status, a sense of guilt, and a sense of uncertainty enter uncomfortably into the annual tipping problem.” In a year when the economy was slowing down, and at the start of the recession, the general advice was to hold back. Sonia Kamsky, who lived at the Imperial house on Sixty-eighth and Lexington, was planning to do just that; cutting back from $380 for the eighteen employees of the building in 1970, to $220. Or maybe she just didn’t tell the truth. The article hints that Sonia is not alone; and in any case, if others would follow her (and their suggested) lead, she certainly would not be alone. But one has to wonder if, even back in 1972, Sonia might not have been telling the truth. There would be good reasons for her to lie, as we will see.
In 1975 the Times was more helpful; they clearly tell tenants what not to do and why. First rule: Don’t ask the doormen. If you do, a more generous bonus will certainly result. According to the Times:
…An employee’s psychological attack goes like this: To one group of tenants—and he knows which one—a doorman will lament about how many people forgot him and how terrible he feels to find his work unappreciated. This heart-wringing tale will make the questioner feel that at least he or she will do right by the poor soul. Result: A more generous tip. To the other type the doorman will, with equal cunning, confide that he is so lucky to be in a building where the residents appreciate him and with surprising generosity too. Result: A competitive spirit emerges, a desire to out-tip the Joneses.
Note that the Times presumes that doormen know what kinds of claims will work with which tenants, which is a good insight, since doormen can read their tenants’ psychological orientations well. The Times introduces some ambiguity, though. Are tenants concerned with what other tenants will think or with what the doormen will think of them, relative to other tenants? Here it is important to fix one idea: while it sounds clever to say that doormen will induce a competitive spirit among tenants, the tenants are not so interested in what the Joneses think about them. They are interested in what the doormen think about them instead. The competition is in this sense asymmetric.
In 1975 the Times tried a new tack beyond considering doormen strategies. Consulting the etiquette expert Elizabeth Post, the Times reported that the fiscally challenged tenant can try gifts of “warm gloves, a bottle of wine, etc.” But this is not really recommended, since “what most building employees really want in an otherwise warmhearted season is cold hard cash.” So how much to give: here, the numbers are few and far between. The president of J.J. Sopher, a building management firm, suggests $20 to the superintendent, $10 to the doormen, and $15 to the porters. An unidentified tenant suggests somewhat higher bonuses: $35 for the super and $25 for the doormen/elevator operators. In 2002 dollars, this would be around $60 to $100 for supers, and $30 to $75 for doormen and other staff. Strangely, these figures suggest little change from the first set of figures recommended in the mid-1960s, despite relatively constant (albeit low) inflation.
The children of the tenants in 1965 to 1975 are now tenants themselves. Like their parents, they could turn to the print media for assistance. In 2000, a quarter century after the last article considered here, the advice is more specific but equally unhelpful:
There are two things to consider when you’re determining how much to give. The first is building size—the smaller the building, the larger your bonus should be. The second is the level of luxury. Lawrence Vitelli of Insignia Residential Group, which manages some of the highest-priced properties in the city, says supers at its big buildings routinely get between $100 and $300 from each tenant, and at small buildings, $500 to $1,000 is not unheard of. But chances are you won’t have to shell out that much. For most buildings, $30 to $50 is appropriate for doormen, $50 to $100 for supers. Support staff like handymen and elevator operators are in the $20-to-$30 range. Adjustments should always be made according to seniority, and if you’re planning on doing any kind of renovation in the upcoming year, it’s in your best interest to give the super more than usual.
Adjustment for seniority does not mean that tenants who have been in the building a long time should give more or less. It does mean that staff with long tenures should be given more, independent of service, than staff with short tenures; though why this is the case, when the underlying argument for the bonus rests on the down-payment model (Planning to do renovation? Maybe give a bit more), is unclear.
If the general advice is consistently unclear, the historical pattern is very clear. First, there is significant change in the value of the recommended bonus. In constant 2002 dollars, the average recommended bonus declined significantly over time. Second, the advice is increasingly less helpful. The spread of the recommended values, even though the absolute value has decreased, has increased significantly. One would expect that the spread would decline as the absolute value declined. Third, there is remarkable stability in the language used to talk about the meaning of the bonus. Is it a reward for service well done, or is it an inducement for services to be provided? The Times waffles throughout. The last sentence of the 2000 recommendations is clear: for those planning renovations, a bribe is necessary. Likewise, in a perverse twist on the traditional down-payment model, Jodi Wilgoren, writing for the Times in 1998, makes the case for seeing the bonus as a special kind of down payment, not for service, but to avoid negative outcomes. Here the bonus is presented as an anticipatory hedge against a shakedown; in Wilgoren’s world, the doormen are a cross between the Sopranos and the squeegee men who offer to wash your car windows. No one really wants them around; the bonus makes sure that they do no harm, forgetting completely about the promise of service. It’s like the old days of Halloween when “trick or treat” carried an implicit threat: no candy and we egg your house. In this context, Wilgoren notes that
while most people interviewed in Chicago, Seattle and Nevada said they tipped out of guilt or habit, many New Yorkers were motivated by fear. At one Manhattan parking garage, the holiday tote board shows that the guy in space 41 gave $450; other regulars might well wonder what could happen to their cars if they failed to return the envelopes left on their windshields. Likewise, some veteran city dwellers say, ignore the Christmas card from your building’s superintendent at your peril.
The reality is that nothing written about the bonus escapes the same rhetoric, even if the advice jumps around. From seeing the bonus as compensation for past or future service, or avoidance of a shakedown, columnists and pundits seemed trapped in an interpretive frame that encodes the bonus as an economic transaction. It is really a social transaction, in which ambiguity over valuation and ambiguity over timing and value of the return gift are the central elements. We may be able to make some progress if we rethink the frame and focus on the sociological significance of the bonus. Shifting frames should, at the least, make sense of the fact that the value of the recommended bonus has declined over time. It will also help us to understand why many people lie when they report how much they give, often reporting less rather than more.
the bonus as a mechanism for encoding distinctions
Let’s ignore the economic “meaning” of the bonus, forgetting for the moment whether it is a pre- or post-payment. Sociologically, the bonus is a simple mechanism to define two relationships. The first is the relationship between tenants and doormen. The bonus encodes the status distinction between doormen and tenants. The second is the relationship between tenants and tenants. With respect to tenant relationships, there are two frames of reference, first the frame for tenants thinking about their neighbors, and then for doormen thinking about their tenants. The first is simpler. In talking with other tenants about how much they give, tenants navigate between two sources of potential embarrassment—giving too much and giving too little. Giving too little is just potentially embarrassing. Many tenants feel conflicted about the bonus—they know that they should give and that it is right to give and that giving should make them feel good, but at the same time they often feel that things are tight all around and especially at Christmas, when they have numerous competing obligations. Still, as one tenant on the Lower West Side told me about her neighbors:
I would be embarrassed, I guess, if I didn’t give the right amount. Some of this is just me, because I am obsessive, you know. I wasn’t—I was brought up to do the right thing. But I also don’t want them to think I’m really cheap, even though they don’t really have any idea how tight things are right now.
Nobody wants to be embarrassed, and giving too little is potentially embarrassing. So is giving too much. The mental gymnastics can be quite complex. Tenants who rhetorically construe their gift as a gift—that is, as “thanks”—express concern about their neighbors; they tend to describe their neighbors as motivated by anything but altruism. These tenants worry that their neighbors will think they give too much; it is because they construe their neighbors as instrumental—as people who give bonuses not to say thanks, but to get better service or garner status. If their neighbors think this, then they are likely to interpret their gift as instrumental.
I want to give them a good tip. They do a good job. I want to thank them for that. And they thank you, too, you know, they appreciate it, so they thank you. It’s little things like a nicer “good morning” or just unusual things. But others think that it is a putdown of them, of the doormen, if I give more than the suggested amount. Like, “What are you trying to do?” They don’t want to give, so they think that if we give it is because we want something back. But that’s different. So you don’t want them to think you think that you are superior to them.
If one’s neighbors are not altruists, it is better to underreport than to be exactly accurate, especially if one imagines that they are on the high end of the distribution, which is where altruists end up and instrumental givers want to be. But not all tenants are altruists. It is not accidental that many tenants question the motives of their neighbors. If we focus on the bonus as a mechanism for encoding status distinctions among tenants (in the eyes of the doormen), we can understand better why when tenants tell their friends and neighbors how much they give, they may often underreport rather than overreport the value of their gift. Why would tenants, concerned about their image in the eyes of doormen, underreport their gifts, risking the approbation of their neighbors? One possibility mentioned above is that tenants do not want to be seen as instrumental by their neighbors. The second idea is that they are trying to influence their neighbors’ contribution, for instrumental reasons.
It is clear that purely instrumental tenants perceive that it is in their interest to maneuver for local advantage over their neighbors in order to reap status benefits from the doormen. To be in a position to obtain this advantage, though, they need to figure out how much money their neighbors are giving. This is why they talk to each other or, rather, establishing what others give is the ostensible reason tenants report talking to other tenants about the bonus. Strangely, if they thought about it more carefully, they would realize that they talk to each other not to get information, but to give it—and often, to give bad information. What they often miss is the fact that, like them, everyone has an incentive to provide bad information.
Consider the problem as it unfolds. Each tenant is trying to decide how much to give. They want to give as little as possible. They want to avoid the bottom quartile of the distribution, they would prefer to be at the top, and they recognize that they gain proportionally little from being in the middle—but all things being equal, it is better to be at the top of the middle than at the bottom of the middle. Against this background, and looking forward to the upcoming year, tenants will find it in their self-interest to understate, when asked by others, the size of their bonus in the previous year. Consider the problem that tenants have when they try to ascertain, or when someone else tries to ascertain, how much money they give to their building staff. Here is what one tenant says:
I don’t really tell the truth about this. If someone in my building asks me how much I give to the doormen, I try to find out how much they gave the year before and match that amount. If they say $50, then I tell them I gave $50 too. If they say $25, I say I gave $25 as well. If they are new, I tell them I gave a little less than I really did. If I don’t really like them, I tell them even less. This is because if I tell them how much I give, then they will give more than that and then instead of being one of the better tippers, I become one of the cheaper ones. No matter what I tell them, they are going to give more than me, because that is what they are trying to find out anyway. They just want to know how much they should give to make them look good, and no more.
The logic is simple: if all tenants give around $20, much is to be gained by $25 (and the marginal gain for $50 is minimal, and $100 is so out of line that it looks like an attempt to purchase favor, or in any case accomplishes nothing since one can get to the top of the distribution at a significantly lower cost). If I want to give $25, it is in my interest to tell others I give $10 or $20, so that if they follow my advice, I will look good at minimal cost. But if we assume that everyone pursues the same general strategy, then it is obvious that the advice seekers will also try to gain advantage by slight overpayment. Consequently, the tenant who stated she gave $20 should assume her neighbor will give $25, and so she should give $30. If there were a constant relationship between the amount actually given and the amount stated as given, one would quickly observe a rapid escalation of bonuses. But if the stated amount remains relatively constant over time, this pattern has the unintended consequence of slowing down the natural escalation dynamics that govern such bidding systems, although increasing (slowly) the gap between the real and the claimed bonus. Real bonuses will increase slowly over time, whereas the stated bonuses will remain relatively steady. Consequently, the misrepresentation gap will increase, all things being equal. And here, as it turns out, lies the explanation for the historical patterns we observed in newspaper advice columns.
Recall that the key findings are that in absolute terms the bonus has declined and yet (even considering the smaller absolute base, which ought to lower variance) variance has increased. The decline is associated with the steadiness of the claims (after all, newspapers can only learn what people give if they tell them), and variance is associated with the increased gap between claims and reality. The micro-mechanism at work then is simple. Tenants may say, and some may believe, they are asking for information when they set out to ascertain what their fellow tenants are contemplating as their bonus, but really they are engaged in providing bad information. Each tenant risks being considered cheap by the other tenants, but if all engage in the same general model (which is to understate their bonus from the previous year), they jointly construct a world in which everyone is cheaper than they really are. Hoping against hope that they convinced their neighbors to hold the line in the bonus game, each tenant adds a little more to the kitty. Because they cannot subsequently find out if their neighbors did the same thing, they then try to read the behavior of the building staff to ascertain if they got it right for the year. One of the key ways they read this is to ask their neighbors if they know specific staff, since they presume that such knowledge arises in part from special attention on the part of the staff. Tenants know that this is a relatively weak proxy, if cheap to exercise. Still, the little cards distributed each year make it easy to start conversations with other tenants about the bonus.
The best information comes from watching the doormen. But watching creates a whole set of new problems. The bonus encodes distinctions between tenants for doormen, but doormen are also savvy enough to create ambiguity so that reading their behavior is difficult and designed too hard to interpret for tenants on either end of the giving spectrum.