There always seems to be a new startup involving sending money person-to-person, with the most common demo showing how easy it is to split a restaurant bill with your friends. Is this really a huge problem? Are there many groups of friends where one person orders lobster and four drinks without offering to pay their fair share? Yes it can get weird once in a while, but I would think things would self-regulate quickly. (Okay, maybe not the $47,000 food bill for 6 people on the right!) Also, it’s not very hard to ask for split checks with modern POS cash registers… maybe just tip a bit more for the inconvenience.
The economic argument is that if you know you’ll be splitting the bill evenly, you are incentivized to order more. In a group of six, ordering a $6 cocktail only costs you $1 more. A $12 appetizer is only $2. But you’re also subsidizing other people, so social dynamics come into play. If someone believes others are “freeriding” on them, then they’re more likely to order more, and so on. Do people really spend more when splitting the bill?
According to a study pointed out by Undercover Economist Tim Harford, people just might:
Diners were, at random, offered three different billing rules: split-the-bill, pay-your-share, or on-the-house. They were also asked to order food by writing their choices down, without discussion. This odd request was made less odd by the fact that they were all filling in questionnaires at the time.
Homo economicus immediately emerged: diners ordered, on average, 37 shekels worth of food when paying their own way, 51 shekels when splitting the bill, and 82 shekels when the experimenter picked up the tab for everyone. (A small follow-up experiment hinted that people splitting the bill six ways behave similarly to those paying one-sixth of their own bill.)
The study involved bringing strangers together in an actual restaurant ordering real food, so it’s close but not quite the same as eating with friends. Even with friends, I still tend to think as a group the total bill would be a bit higher, like maybe one more person will order a beer if everyone else is having one.
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This is interesting. For me, when we eat in a group it typically is not specified in advance whether the bill will be split equally or in a pay-for-what-you-order manner. I usually try to pay the greater of an equal share or what I had at the meal.
A couple of weeks ago I had friends in town and met them for lunch. It was myself, my friend, and his wife. We met and before anyone ordered, in an attempt to avoid this kind of calculus, I said I was buying lunch so everyone should order whatever they want. Interestingly, both of my friends ordered sandwiches rather than entrees, and afterwards I was wondering if my offer to buy lunch had caused them, in their politeness, to order less expensive dishes than they may have if they were paying a share. Not my intention, but maybe an unintended consequence of my action.
I HATE splitting the bill! I don’t usually order drinks when we go out to eat so seeing everyone around me order $10-15 drinks and then casually say “let’s just split it” seriously pisses me off. And yes, I do believe that splitting the bill will make people order more and spend more than if they were not being subsidized by people like me. There were a couple of times when my wife and I shared an appetizer and one main course while every other couple got separate appetizers, main course, drinks and maybe even a desert and then “let’s just split it” came up, I was like WTF? /rant
I completely agree. I do not drink alcohol and shouldnt be expected to pay for those that do when your drink costs more than my meal. If i had to split the bill i would always get the raw end of that deal because i will always end up paying more.
Having two small children with a third on the way means I only ever have takeout if not eating a home cooked meal. And if I do go out it is normally just myself and my wife. So I don’t really have to worry about this behavior.
But why agree to splitting the bill? Why not just advocate separate checks?
I AGREE! think splitting the bill makes people act differently. I am one of those people that does not drink. I don’t consume alcohol because of a stomach condition I have. And I always get screwed when we go out with another couple or with a group.
My wife and I are comfortable but we are careful not to overspend when we go out to dinner. And with entrée sizes SO HUGE these days— many times we share one.
The fact that we shared one entre or that we did not drink very rarely defers our “friends” from saying “lets just split it”. Are you serious?
But it gets worse…..
Because of the fact that we usually get screwed– we often change what we order to something more expensive or we order two entrées like everyone else. Actions we would never take if we were alone. And I believe that the others who dine with us also order more expensive items and more drinks and “bottles” of wine than they would if they were alone.
It is a never ending escalating cycle! And I hate t too.
RANT !
Wait, you split the bill? You don’t get in a fistfight to pay the entire thing like the rest of us Chinese people? 😉
I read this post (http://www.theawl.com/2011/03/how-to-split-a-check-at-a-restaurant) and have been splitting evenly since. Going out to eat is a special occasion and I think an even split encourages people to enjoy themselves and eat what they want.
My friends and I either pay individually with separate checks or sort it out amongst ourselves so everyone pays their own share We can do arithmetic so its never really a problem.
I’ve never done evenly split bills. I don’t know why people would do it that way, its just set up to be unfair. Maybe if its a trivial difference then I could see doing it for simplicity but its hardly ever a small difference.
@Jon M – Oh my check-fighting skills are quite honed despite being still younger than most of my check-affording relatives. 🙂 I think I really pissed off my Uncle a couple years ago when I paid for a larger dinner by sneaking my credit card to the waiter. I ended up with an envelope of cash and a stern look the next day.
I’m guessing most readers are too risk-averse to play check roulette each time, where all credit cards are put in a pile and then one is selected to pay for the entire meal? I’ve never done it before.
I don’t drink, so each Xmas when we have a party dinner at a fancy restaurant downtown I always end up ordering the most expensive entry plus ordering a take out one for my family. My argument: for 12 employees, they go through 15 bottles of wine and champagne, and that usually is like 80-90% of the entire bill (while each employee still ordering those entries). I always felt that the money will be better spent just giving out as bonus. But some management book always say cash bonus is not as memorable than a once-a-year lavish dinner.
I’m the opposite. When I’m splitting/sharing the bill, or the other party is paying, I don’t want to screw others over, so I make sure to order less. When I’m paying for the bill, or for myself, then I’m free to order extra stuff like beer.
Personally, I feel that these days with electronic ordering systems, each person paying separately should be common.
Interesting article! We are very interested in behavioural economics and its intersection with spending, saving and investing. In a survey eZonomics ran a couple of years ago (http://www.ezonomics.com/polls/when_dining_out_with_a_group_do_you_prefer_to_split_the_bill_evenly_or_pay/), votes were almost exactly evenly split between people who perfer to split the bill and those who prefer to pay for what they had.
Research does tend to point to people changing what they order when bills are evenly split. Perhaps it’s a good idea to discuss even split v pay-your-own BEFORE ordering?
I 100% order more…100%. Where I normally may only get 1 drink with dinner if the guy next to me is on his 3rd scotch why wouldn’t I?
I used to hate it when people would want to split the bill and I didn’t like the whole idea of taking turns buying rounds of drinks. Unless everyone is really ordering same priced items and everyone is drinking the same thing….someone is going to subsidize what others are consuming.
I think it is very unfair when buying rounds that someone drinking a draft beer has to buy Jack and cokes for everyone else. And what if you only drink four drinks but the group is made up of 7 people? So then you could have just paid for six Jack and cokes and your own beer, when you only had plans to buy four beers for the whole night.