Growing up, I became accustomed to using the phrase "that's okay" to mean "no" or "don't bother." For example:
Waitress: Yous guys want any dessert?
Patron [shaking head to mean no]: That's okay.
Waitress: Here's the check then, hun.
In other words, the patron is really trying to say, "That's okay, but I am already full."
Later on in life, when traveling to areas with other dialects of English, I was often met with confusion when trying to use that phrase to mean "no". When I got to thinking about it, the phrase itself is quite ambiguous, because it is unclear to what "that" refers. In fact, "that's okay" could very well be taken to mean "yes" in the above scenario, if interpreted literally. I have since taught myself to avoid this usage.
Having first learned English in the Philadelphia dialect, I attributed this weird usage as a regional fluke, like our use of "anymore", et al. However, I have since heard other people in other dialects using this phrase to mean "no".
Questions: Is this usage of "that's okay" a regionalism? Is its etymology as simple as just dropping the end of the phrase, e.g., "That's okay, but I am already full," or is its etymology more complex?
Edit: This is completely anecdotal, but I seemed to meet the most resistance to this construction on the West coast of the US, and particularly in the Pacific Northwest, e.g.,
Waitress: Would you like any dessert?
Me [shaking head to mean no]: That's okay.
Waitress: Does that mean "yes" or "no"‽
Best Answer
I don’t think it’s a regionalism. I’m from Tennessee and it sounds perfectly natural to me. And there’s evidence from the movies:
(Of course, real people don’t talk like movie characters, but here the joke only works if the audience understands “That’s OK” the way you and I do.)
Apparently Canadians say it too:
It might be a North Americanism, I guess, but I suspect it’s not even that, just the sort of counterintuitive idiom non-native speakers naturally have trouble with.