Employees at public companies tip their taxi drivers more on days when their companies perform well in the stock market, according to new research from Binghamton University, State University of New York. While the effect is short-lived, research finds it is stronger for firms offering more stock-based compensation.
Tipping did not decrease significantly when a firm’s stocks performed poorly.
The GPS and payment data from about 2 million NYC taxi rides between 2009 and 2016 was analyzed for the findings – with a focus on pickups that took place between 5:00pm and 6:00pm. Experts also explored how stock market performance impacted tipping for taxis hailed near a firm’s headquarters.
The study found that when a firm experienced a positive shock to its stock performance, employees would tip their taxi drivers more. This increase in tipping would only happen on the day of the positive stock performance, though.
Some other findings:
- The effect of stock performance on tipping is greater at firms that offer more stock-based compensation.
- The number of taxis taken near a firm’s headquarters increases with the firm’s stock returns.
- Increases in tipping also came after a firm’s initial public offering (IPO), particularly at the end of its IPO lock-up period, when employees are allowed to begin selling the stocks they hold in the firm.
- The farther you get away from the physical locations of a company, as well as the end of a work and trading day, the more the effect decays.
Source: Binghamton University
