How Touch-Screen Buttons Netted NYC Cabbies A Cool $144M

By presenting riders with three default options, in-cab credit card readers increased tips.

How much is a touch screen button worth? If you’re a New York City cabbie who was forced to install a credit card reader in your taxi, it’d better be worth a lot, because those damn things were expensive. Well, according to the New York Times, those credit card readers increased tips from 10% to 22%, on average. Designer Joshua Gross did some arithmetic and it turns out that the touch-screen buttons were worth an extra $144,146,165 in tips.

So how could three buttons on a screen bump tips by over a hundred million bucks? Such is the power of user experience design—specifically, the power of the default option. A taxi rider paying her fare by credit card is presented with three buttons for adding a tip: 20%, 25%, and 30%. You can enter whatever tip you like manually, but you’re probably just going to hit one of those buttons. Since the average tip increased to 22%, that implies that most people hit the middle or lower option.

I asked behavioral economist Dan Ariely, author of the new book The Honest Truth About Dishonesty, why default options are powerful enough to turn even hard-boiled New Yorkers into generous tippers. "One reason is that they’re the path of least resistance," he says. "Defaults always require less thinking, which is very tempting. But we also view default options as implicit recommendations—we assume that whoever designed the system thought about it and came up with this set of the 'right’ responses."

So buttons make us tip better because we’re lazy and we don’t want to be wrong. Could cabbies have made even more money if the UI designers had presented higher percentages on the tip buttons? "I think the answer is absolutely yes," says Ariely.

But before you go thinking that UI designers could Jedi-mindtrick us all into emptying our wallets just because the buttons say so, Ariely says that even our laziness has limits. "If the options were 21, 26, and 31, i think [the average tip] would have gone higher. But the range has to reflect some possibility of normal behavior. No one is going to leave a 100% tip." Not unless you’re Jay-Z, anyway.

And remember that the highest default option was 30%, but average tips only increased to 22%. This "middle to low" behavior emerges from the system presenting three buttons instead of two, or one. "When you present three options, people think this is the range of acceptable possibilities," Ariely explains. "They don’t want to be too high or too low, so they tend toward the middle option. But this is money, so they’re still motivated to save and go lower as well. This might explain why the average tip reflects an amount in between the lower and middle default options." Still, $144,146,165 isn’t chump change. So the next time you have to explain (or justify) the vaporous concept of "user experience" in design, just drop that figure into the conversation. It should make things clear as day.

[via Joshua Gross; Top image by Nadirco/Shutterstock]

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  • Bill

    I can't believe how naive you are.  I've been tipping NY cabbies 20% or higher for years, and I expect most others do as well.  I seriously doubt that all drivers report the full value of cash tips.  With credit cards, on the other hand, the full amount of the tip is reported.  I doubt drivers are making any additional money from credit card fares; in fact, I expect they're worse off, though the city, state and federal government are doing better because more income is being reported.

  • Milo @PoliticalOptics

    As a write and filemaker, you seem not to have done research before writing this article. The tone attempts to marginalize the minimum wage cabbies.

    Today it cost NYC cabbies $2 per mile to run a taxi as compared to pre-credit card 2008 cost of $1.30.  There is a 5% charge on all credit card transition. The fee covers bank fees and pays for the credit card technology installed in the cab. Also, the credit card fee is applied to the fifty cent tax paid to the MTA for ***their*** employees retirement funds.  In addition, thousands of cabbies do not own their taxi and pay nightly a $124 lease fee and additional $4.77 for workmen's compensation insurance. In the last year the price of gas increased to $4.25 a gallon.  Before NYC cabbies makes a dollar for themselves they have to cover $200 in cost.  

    Noblesse oblige