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What is the Social Exchange Theory?

By Darlene Goodman
Updated May 23, 2024
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Social exchange theory, also called the “communication theory of social exchange,” is a psychological concept suggesting that humans make social decisions based on their own perceptions about the costs and benefits that could be gained by action or, conversely, by inaction. The underlying hypothesis claims that people evaluate all social relationships to determine the benefits they will get out of them. It also suggests that someone will typically leave a relationship if he or she perceives that the effort or cost of it outweighs any perceived advantages. The theory is usually presented with the sort of language most commonly seen in economics and financial sectors. This can be jarring at first, but experts often argue that there are a number of important parallels between how companies and businesses make reasoned decisions and how people do.

Basic Premise

According to the theory, people will only be generous if they expect some personal benefit because of it. Examples of personal gain from this sort of self-sacrifice can include a show of gratitude from the recipient or the approval of the donor’s peer group. This idea emphasizes the anticipated return for such good deeds, also called reciprocity, which is expressed really well in the common phrase I’ll scratch your back if you’ll scratch mine.

People who use social theory to describe social situations typically use economic terms like “benefit,” “gain,” “cost,” and “payment.” These words are most commonly used when describing corporate or financial transactions, but according to many social psychologists they also have relevance to personal interactions. In some ways, the theory’s treatment of people as economic vessels helps conceptualize human interactions as calculated decisions that have some pattern to them, rather than as subjective and impulsive emotional reactions.

The theory basically argues that people consciously and unconsciously evaluate every social situation in terms of what they will have to put in or give up, then relate this to the benefits they think they may get in return. The greater the potential benefit, the greater the personal investment an individual is likely to make in a relationship.

Origins

The theory was first developed and gained its initial popularity in the late 1950s. The American sociologist George Homans is widely credited with creating it, and scholars first began discussing it seriously after Homans published an article describing the theory, titled “Social Behavior as Exchange,” in the American Journal of Sociology in 1958. He expanded on the idea in several subsequent articles and books. The Austrian-American sociologist Peter Blau adapted and applied many of Homans’ initial ideas for the 21st century, and was the first to create a visual “map” of social spaces and interactions.

Importance of Satisfaction

One of the main claims of the theory is that people make choices about social interactions based on their individual satisfaction within a given relationship. People typically have a high level of happiness if they perceive that they are receiving more than they are giving. If, on the other hand, people feel that they are giving more than they are getting, they may decide that the connection is not fulfilling their needs. Theorists speculate that, whether they know it or not, almost all people are making these calculations when they weigh how involved they want to be in certain interpersonal relationships, or even if they want to be involved at all.

Whether a person ends a relationship that he or she feels is not worth the social investment often depends on the options he or she thinks are available. Individuals who think that they could fare better in other relationships are more likely to leave, while people who feel that there are no better options than the costly relationship may be more likely to stay. The exchange theory tries to quantify these choices and make them easier to identify.

Role of the Individual

The social exchange theory is considered by many psychologists to be highly individualistic, which means that it assumes that the individual assesses all human social interactions based on his or her personal gain. This supposition denies the existence of true altruism, and suggests that all decisions are made from a self-serving motivation. Critics often point to this particular aspect of the theory when trying to identify flaws in the logic or structure of the core arguments.

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Discussion Comments

By anon942050 — On Mar 25, 2014

It's one thing to not like a person, that's your prerogative. But to be completely disrespectful is another. I pray that God show the disrespectful individuals and their family the 'same mercy' that they have shown to others!

There is a reaction for every action. One tends to forget that when they're spewing their 'brand' of freedom of speech. We are all guilty of it. If you want respect, you must first give/show it. If you want mercy, you must first give/show it. If you don't, may God Almighty grant you and your family the same!

By anon308245 — On Dec 10, 2012

While this might be a gross oversimplification of human emotion, I do think that there is some accuracy to describing human interaction in the same terms that we would describe a market economy.

Certain the social exchange theory holds some merit as many people will admit to meeting and dumping friends based on the social value that it might have.

This can go fairly deep into human psychology and I think there is an example of human behavior that supports this theory.

It happens that some people will actually lie about social interaction with others in an attempt to build a reputation, or perhaps you could call it a social credit rating. These false relationships are created as a fake front to entice others into investing with that person socially.

By anon294305 — On Oct 01, 2012

A psychopath says, "If I kill them, I will probably not get caught, and would have eliminated my problem. But if I get caught then I have to weight up the cost benefits of staying in jail versus freedom, in which case it might still be worth it. So what the heck? Just kill them!"

So nuking Iraq will save us from years of war. Heck, let's go use it! Yay! No, wait a minute! What about the nuclear fallout. Maybe it will blow over our way. Nah! All the fallout will be over there. It doesn't matter.

By youbiKan — On Oct 06, 2010

@sammyG: I can understand your analysis of the social exchange theory and how reputations are akin to a credit rating system for personal finance.

At the same time, I think there are some areas where conscious action is taken to adjust oneself in the social economy. However, there are also areas where a more subtle, and I dare say even a subconscious or instinctual reason, might be behind the reason for any given social interaction.

Deep rooted feelings like jealousy over another man or woman's lover could be perceived as a form of this subconscious social exchange. There might be some overlying social implications that the lovers are aware of, but I think the more deep rooted causes are stronger than most of the social habits that we learn.

It is the balance between these inherent feelings and social provocations that one must find to be successful in a social economy. A better understanding of the process will no doubt help one navigate the complicated maze that is human interaction.

By sammyG — On Oct 06, 2010

While this might be a gross oversimplification of human emotion, I do think there is some accuracy to describing human interaction in the same terms that we would describe a market economy.

Certainly, the social exchange theory holds some merit, as many people will admit to meeting and dumping friends based on the social value that it might have.

This can go fairly deep into human psychology and I think there is an example of human behavior that supports this theory.

It happens that some people will actually lie about social interaction with others in an attempt to build a reputation or perhaps you could call it a social credit rating. These false relationships are created as a fake front to entice others into investing with that person socially.

I also think that most people who are conscious of society will grant the fact that reputations have a lot to do with how others treat them. To describe it as a social economy is a very good way to help understand how people interact in society.

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