➡️ Video Lesson
➡️ Study Card
➡️ Introduction
Social exchange theory is a theory in social psychology that postulates that people form a relationship through cost-benefit analysis.
According to social exchange theory, self-interested actors transact with other self-interested actors to reach individual goals that they can not attain on their own.
Social exchange theorists view relationship formation as behavior that may result in economic and social outcomes (Lambe et al., 2001).
For example, social exchange theory views a friendship between two people as arising from their realization that the benefits of that friendship outweigh its costs. Cost-benefit analysis, therefore, drives not only market relations but all human relationships (Burns, 1973).
Definition of Social Exchange Theory
Social exchange theory was founded by George C. Homans (Homans, 1961) and most comprehensively developed by John W. Thibaut, Harold H Kelly, Peter M. Blau, Richard M. Emerson, and Claude Lévi-Strauss.
Social exchange theorists generally compare all human interactions with the financial market. Unlike economic exchange, however, the elements of social exchange are rather varied and cannot be reduced to a single quantitative exchange rate, such as market price.
All approaches to social exchange theory are unified by the assumption that cost-benefit analysis drives relationship decisions.
According to social exchange theory, every relationship has the following components:
- Costs – the elements of a relationship which have a negative value to a person. For example, the money one spends to sustain a romantic relationship.
- Rewards – the elements of a relationship which have a positive value to a person. For example, the companionship of a friend.
Social exchange theory argues that people calculate the overall worth of a relationship by subtracting the costs of that relationship from its rewards.
Based on this formula, we can see the different examples of relationships people form according to social exchange theory (McDonell et al., 2006, p. 366).
Social Exchange Theory Examples
- Most Profit – When faced with alternatives, every individual will calculate the costs and benefits of each and decide according to the outcome. They will choose the option that maximizes their overall profit.
- Highest Reward – Costs being equal, an individual will choose the alternative from which they expect the highest reward. They are motivated by the potential for the greatest benefit.
- Lowest Cost – Rewards being equal, an individual will choose the alternative from which they expect the lowest cost. They aim to minimize their expenses or losses.
- Long-term Outcome – Immediate costs and rewards being equal, an individual will choose the alternative from which they expect the best long-term outcome. They prioritize future benefits over immediate gratification.
- Immediate Outcome – Long-term costs and rewards being equal, an individual will choose the alternative from which they expect the best immediate outcome. They focus on short-term gains rather than potential future benefits.
- Social Approval – All other costs and rewards being equal, an individual will choose the alternative from which they expect to receive the most social approval. They value acceptance and validation from others.
- Autonomy – All other costs and rewards being equal, an individual will choose the alternative from which they expect to receive the most autonomy. They prefer options that allow them greater independence and control.
- Least Ambiguity – All other costs and rewards being equal, an individual will choose the alternative the outcomes of which are the least ambiguous. They favor clear and predictable results.
- Security – All other costs and rewards being equal, an individual will choose the alternative from which they expect to receive the most security. They seek stability and assurance in their choices.
- Agreement – All other costs and rewards being equal, an individual will enter into relationships with people with whom they agree more often. They find comfort in shared beliefs and opinions.
- Equal Status – All other costs and rewards being equal, an individual will enter into relationships with whom they perceive to share social status. They prefer interactions with those of similar standing.
- Monetary Gain – All other costs and rewards being equal, an individual will choose the alternative from which they expect to receive greater financial/monetary profits. They are driven by the potential for increased wealth.
Criticisms of Social Exchange Theory
One critique of social exchange theory is that is fails to adequately address the complexities of social relationships. There is a great deal of factors that go into why a person might engage in a relationship with another person.
Thus, while the theory may make theoretical sense, it’s hard to ever put it into practice. Each person has unique reasons – psychological, social, physical, etc. – for why they maintain social relations with the people around them.
Indeed, people may even have irrational or unconscious reasons for why they remain in social relationships that cannot be explained by the simplicity of this theory.
Furthermore, the theory fails to account for the position of empathy and altruism in human behavior. There are many examples of decisions made by people that appear selfless or even self-destructive that the theory struggles to account for.
Conclusion
Social exchange theory is one of the most prominent perspectives in the social sciences. It is a general view of human relationships that is based on several key assumptions.
It posits that we naturally seek rewards and avoid punishments. It assumes that we are rational and calculating. It states that we evaluate our relationships based on their costs and benefits.
According to this theory, everyone wants to enter into relationships that are beneficial and avoid relationships that are too costly.
Friendships, romantic relationships, family relationships, and so on can all be seen as similar to financial relationships. For a social exchange theorist, the most vital components to understanding human relationships are their costs and rewards.
➡️ References and Further Reading
References
Blau, P. M. (1964). Exchange and power in social life. New York, J. Wiley.
Burns, T. (1973). A Structural Theory of Social Exchange. Acta Sociologica, 16(3), 188–208. https://doi.org/10.1177/000169937301600303
Homans, G. C. (1958). Social Behavior as Exchange. American Journal of Sociology, 63(6), 597–606. https://doi.org/10.1086/222355
Homans, G. C. (1961). Social Behavior: Its Elementary Forms. Harcourt, Brace & World.
Lambe, C. J., Wittmann, C. M., & Spekman, R. E. (2001). Social Exchange Theory and Research on Business-to-Business Relational Exchange. Journal of Business-to-Business Marketing, 8(3), 1–36. https://doi.org/10.1300/J033v08n03_01
McDonell, J., Strom-Gottfried, K. J., Burton, D. L., & Yaffe, J. (2006). Behaviorism, social learning, and exchange theory. In Robbins, S. P., Chatterjee, P. and Canda, E. R. (2006). Contemporary human behavior theory: a critical perspective for social work. Pearson, 349-85.
Stafford, L. (2008). Social Exchange Theories. In Baxter, L. A., & Braithwaite, D. O. (2008). Engaging Theories in Interpersonal Communication: Multiple Perspectives. SAGE.
Thibaut, J., & Kelley, H. (1959). The Social Psychology of Groups. Transaction Publishers.
Dr. Chris Drew is the founder of the Helpful Professor. He holds a PhD in education and has published over 20 articles in scholarly journals. He is the former editor of the Journal of Learning Development in Higher Education. [Image Descriptor: Photo of Chris]