Splitting the check increases the pain
Dividing up the dinner bill may be good manners, but according to commentator Dan Ariely, having one person pick up the tab is good behavioral economics.
Dan Ariely (Dan Ariely)
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TEXT OF COMMENTARY
Kai Ryssdal: A dinner out with friends is supposed to be relaxing, not painful. What are the topics you're supposed to stay away from? Politics and religion, right?
Economics, too, it seems, because commentator Dan Ariely says nickel and diming to split the check isn't worth the hassle.
Dan Ariely: When the server drops off the check at the end of a meal, people often scramble to figure out the norms for payment. Do we each pay for what we ordered? Do we split the bill evenly even if John had that extra glass of wine and the creme brulee?
Findings from behavioral economics tell us that one person should pay the entire bill and that the person paying should alternate over time. When we pay any amount of money, we feel some psychological pain. We call this the pain of paying. This is the unpleasantness that is associated with forking over our hard earned cash. But it also turns out that this pain does not increase linearly with the cost of the meal. This means that when we double the payment, the pain doesn't double; it increases just by a bit. In fact, the biggest increase in the pain of paying comes when we switch from paying nothing to paying something. Now, it's easy to see why one person should pay the entire bill. How so? Well, if every person paid their share, they would all experience some pain of paying.
But if only one person paid the entire bill, then the pain of paying for that person will not be that much higher than if he paid just for himself -- let's say by only one and a half times. Meanwhile, everyone else at the table is pain free.
Is this system financially efficient? Probably not, because different meals cost different amounts or the person whose turn it is may be out of town. But even if you end up paying a bit more in the long run for engaging in this practice, you are likely to experience less pain of paying and have more fun dining out with your friends.
Ryssdal: Dan Ariely's a professor of behavioral economics at MIT. His most recent book is called "Predictably Irrational."
Comments
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From diamond bar, CA, 07/14/2008
I am a fan of Dan Ariely. I find much of his commentary interesting.
However, behavioral economics is a relatively new subject that seems to take on many of the bad habits of other sciences.
Ariely's argument is based on a premise that pain can be measured and all pain is equal. However, common sense suggests that the pain suffered from each individual is relative to their frame of reference. For some people who end up paying more than their fair share, this pain turns into resentment that can build up over time. A single experiment measuring immediate pain but does not take into account resentment and consequence is denying a profound outcome that may have an extreme effect on a relationship. Again we see the folly of science applying a relatively simplistic formula on complex human emotion, which, hitherto, we cannot measure.
Behavioral economics is an exciting field that has many profound implications for all facets of society and life, but we must remember that it is limited and cannot effectively predict human behavior consistently.
In addition, the mechanism that is involved in people feeling this "pain" is not fully explained.
From Tokyo, 07/14/2008
Mr. Ariely ignores the role of culture concerning who pays how much. In some places in the world, "pain" is the result of not paying.
Perhaps the real problem is dealing with people who are "free-riders."
From Santa Clara, CA, 07/12/2008
We use a business card (anyone's) and call it the Token. Every time we eat with our friends, the person with the token pays the bill and then passes the Token on to the next friend. Over time the combination of pricey and inexpensive meals averages out over all friends.
From Moorestown, NJ, 07/12/2008
This is also a good way to spend more money than you might otherwise.
From Falls Church, VA, 07/11/2008
just want to learn about maketplace
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