For as long as there have been restaurants and social groups that eat at restaurants there has existed a phenomenon that can only be described as the restaurant bill mystery. You head out for a meal with your closest group of friends, your sports team or your work colleagues. The meal itself is delightful. Good food is eaten, wine is flowing and conversation is bubbling along nicely. Then the bill arrives, an event that has the magical ability of turning a previously wonderful evening into one fraught with challenges and confusion. Why? Over the course of this article I shall try and discover why splitting the cost of a meal causes so many problems.
There are three main ways of splitting the cost of a meal and I shall consider each of these in turn. The first is the simplest, all members of the group just evenly split the cost of the meal. This has the advantage of being easy to work out and in theory allows the bill to be paid with the minimum of fuss and hassle. However, splitting the bill equally has profound implications for the incentives of all of the diners at our hypothetical table. If I know that the bill is going to be split evenly then it makes sense for me to spend as much as possible and in doing so derive more utility from my split of the bill. Unfortunately all the other diners are faced with incentives that lead them to do this as well. The result is that everyone over orders and everyone ends up paying too much. This is a form of the tragedy of the commons. All the diners will deplete each others money even though it is not in anyone’s interest for this to happen. So this method is good news for restaurant owners but bad news for groups eating out.
Due to the problems of splitting the bill evenly the pay for what you ordered method is often preferred. From my experience this is the most common way of splitting a restaurant bill. Sadly, this too is fraught with problems. In theory all the diners, especially students of Durham University I would hope, should be able to calculate the cost of what they ordered and add 10% for a tip. Then when everyone’s money is added up it should equal the total cost of the bill perfectly. Simple right? Wrong. I’ve eaten out with a wide range of groups over the course of this term and the bill has always come up short. Then everybody insists that not only did they put in all of the money for their food, they put in some extra and therefore there is no way they should be expected to give any more. So where is this magically missing money?
The truth is that in large groups people can get away with intentionally putting a little bit less money than they should into the pot. The thinking being that with some people putting in a bit extra the group will get enough money anyway and therefore a ‘cheapskate’ diner can get away with paying less than they should. However, all it takes is a few people to think this and we end up not having enough money to settle up. My problem with this explanation is that when I’m eating out with my closest friends I would expect us not to want to make money out of each other in this way. Should I try and find better friends or is there something else going on here? One problem with they pay for what you ordered technique is that there is likely to be a difference between what each diner ordered and what they consumed. Splitting the cost of a bottle of wine, accounting for shared deserts or starters and what to do if you have some of another diner’s meal all cause additional problems. Furthermore there is also a natural tendency to round down one’s own costs, so if I know I spent £11, I just put in £10. Again, if this replicated over a large number of diners the consequences for the bill are significant.
The economist’s solution is separate bills for each member of the group. This is a good method in terms of incentives. As each diner knows they will have to pay for what they order, they will only pay for what they want to consume. Therefore, the outcome is economically efficient and we face none of the problems of splitting the bill evenly or asking people to pay for what they order. Nevertheless there are some problems with separate bills. The most obvious is that some restaurants will not allow you to have separate checks. I give particular credit to Nando’s in this area for openly allowing diners to pay separately at the till before they receive their food. If a restaurant does allow separate checks a further problem occurs when starters or wine are shared. Additionally, there is a bit of social stigma associated with using separate bills as it suggests (accurately) that your social group has problems splitting a bill. Furthermore, separate bills are also highly time consuming and draw out what most would agree is the worst part of any meal.
So in truth there is no perfect answer. As an economist I’m drawn to separate bills, but in reality this rarely happens. Unless I resign myself to eating alone it looks like I’ll be facing the restaurant bill mystery for the foreseeable future. Still the next time you’re out at a meal I urge you to pay in the most honest and accurate way possible. If the money collected comes to the total of the bill, then I know I’m in good company.