Whether it’s choosing the right carrear path or selecting any particular gadget or buying a new home, you must have made a list of pros and cons before taking any important decisions at least once in your life. But, do you know that you also weigh the pros and cons before interacting with someone. Consciously or unconsciously you do a quick mental analysis of the benefits and costs involved in any social interaction. The social exchange theory talks about the concept of the exchange process (benefits or costs involved) in social behaviour. Here in this article, we’ll learn about the social exchange theory and various real-life examples and applications of the social exchange theory.
What is Social Exchange Theory?
Social exchange theory states that people engage in social interactions and makes relationships with others after weighing all the potential risks and benefits involved in that interaction or relationship. When the benefits weigh more than the costs, people tend to encourage the interaction, while if the costs weigh more than rewards, people resits that interaction or terminate the relationship. According to social exchange theory, social interactions or relationships are based on an exchange process, wherein people want maximum benefits and minimum costs or punishments. The benefits could be money, appreciation, power, or even small gestures like a smile or high-five, and the cost or punishment could be a disgrace, embarrassment, or gestures like an angry face or raised eyebrows.
Social behaviour is an exchange of goods, material goods, but also non-material ones, such as the symbols of approval or prestige. Persons that give much to others try to get much from them, and persons that get much from others are under pressure to give much to them.” – Homans (1958)
History of Social Exchange Theory
The social exchange theory was initially developed by an American psychologist, George C. Homans. He mentioned this theory in his article titled “Social Behaviour as Exchange.” To formulate this theory Homans conducted several studies on the group of people. When he started researching he believed that any community or group can be considered a social system and he conducted the research on the larger groups. However, to examine the social system, one must look at the individual level instead of the massive groups or communities. Later, Homan conducted several studies on small groups and closely analysed what forms of benefits or punishments/costs the group members were receiving or giving to the others. He formulated the framework of different elements such as interaction, sentiments, and activities involved in the social group. He published this research in his first book entitled, “The Human Group.” Later, he conducted the research on a deeper level to understand elementary social behaviour. Wherein, Homans analysed the cost-reward exchange between the two people, where either one of those two people is getting a reward or a punishment. According to Homans, the exchange, i.e., cost or rewards could be both material or non-material goods, for example, money, time, power, or social status. People tend to choose the interactions that cost them less and provide them with more rewards. Following are the three propositions described by the Homans, which summarize the social system behaviour.
Success Proposition: People are more likely to repeat their actions when they find that they are getting benefits or rewards for their actions.
Stimulus Proposition: If the person is being rewarded more often for any particular action or stimulus then he/she is likely to respond more often to that action or stimulus.
Deprivation-Satiation Proposition: If the person is receiving the same rewards, again and again, that reward tends to become less valuable for that person.
Many other researchers have further worked on this theory. Further, the development of the social exchange theory was carried out by mainly the two sociologists, Richard Emerson and Peter Blau. American sociologist Peter Michael Blau paid less focus on behaviourism and highlighted the other concepts such as supply and demand, interests and preferences of the person. Hence, his theory emphasizes the economic exchange rather than the psychological assumptions. Richard Emerson’s work on the social exchange theory is inspired by the ideas of the Homan and Blau. He proposed that the relationships depend on the type and amount of the costs and benefits exchanged between the individuals or the groups. His theory emphasizes that power, availability of resources and dependency on others are the primary concerns of the relationships. Hence, social exchange theory is not a fixed theory given by George Homans, instead, it is the result of the works of several researchers in exploring social behaviour.
Basic Assumptions of the Social Exchange Theory
- People tend to get involved only in those relationships where they see the maximum profit and minimum costs/punishments and they believe in calculated decisions rather than casual decisions.
- People consider the various psychological, social and economic aspects to analyse the pros and cons of every interaction.
- If any two event demands an equal cost, people choose the event that gives them the maximum benefit.
- People tend to look for their benefit in almost every social interaction and always try to avoid the costs or risks.
- Every person has different expectations of costs and rewards, hence if for one person the reward seems insufficient it could be sufficient for the other person.
- Whether consciously or unconsciously people do the analysis of costs and benefits before entering into the relationships.
Some Main Concepts of Social Exchange Theory
Costs or Benefits
The central idea of the social learning theory is that people are more likely to repeat the interactions by analysing the chances of approval (reward) and disapproval (punishment/cost). The interaction is more likely to be repeated if it involves the maximum benefits. According to George Homans, to evaluate the worth of any relationship we consider the potential benefits of the relationship and subtract the potential costs or punishment involved in the relationship, hence in accordance with the social exchange theory the worth of the relationship can be evaluated from the following formula.
Profit (worth of the relationship) = Benefits of Interaction – Costs of Interaction
The perspective of social exchange theory comes into play in friendships, romantic relationships, business, and even while asking for any help from a stranger. This theory argues that people expect others to contribute equally or more in the relationships as they themselves are contributing, i.e., they believe that the rewards and costs in a relationship should be proportional. If the risks overweigh the benefits it results in a negative relationship, and if the benefits overweight the risk it results in a positive relationship.
Expectations and Comparison Level
In the social exchange process, people do the cost-benefit analysis but expectations also play a crucial role. People do the cost-benefit analysis by comparing it with a standard that they set on their past experiences. For example, if the last person you dated had been very caring and affectionate towards you, then your expectation from the next person you might date would be very high. If the next person that you would date is reserved and shy then that person will not be able to meet your expectations, and you will be more likely to terminate that relationship. On the other hand, you are more likely to be in a relationship with that person if the last person you dated was violent or aggressive. Every individual has a different comparison level, i.e., the way of judging the level of profit or cost in any interactions differs from individual to individual. The comparison level of the person may change as the person grows up or it can also be affected by several external or internal factors such as media, family, friends, or prior experiences. For example, the media (movies or series) can raise the expectations of the young people to expect more affection and care from their partners, people whose parents are separated might have a different comparison and expectation level from their partner than the one whose parents are happily married. Also, internal factors like self-worth or self-esteem may impact the expectations and comparison level of the person. Cross-cultural differences also play a crucial role in making social exchange decisions. People belonging to different cultures or societies have different levels of expectations and comparisons, i.e., their judgement of rewards or costs differs. For example, there is a huge difference in the decisions related to social behaviour between the Western and Asian societies. Asian countries like Japan or china prefer the decisions that promote group harmony due to their collective culture, while Western societies prefer the decisions that favour individuals’ rights due to their individualized culture. This means that factors like happiness or freedom of an individual may not seem as costs in Asian society as they may seem in western society.
Social Exchange Theory Examples
Suppose your friend always borrows money or other stuff from you, this means that your relationship with your friend costs you money. But, you like spending your time with your friend as he/she is supportive, loyal and fun to be around. When you will weigh the pros and cons as per the social cognitive theory, you prefer to stay in the friendship if your friend is bringing support and excitement in your life even if he/she borrows money from you, but you may terminate the friendship if you feel that the freeloader behaviour of your friend is resulting in a burden over you.
Let us understand the reward and punishment concept in dating through an example. Suppose you asked someone out on a date, if that person agrees, it means you have gained the reward, and you are more likely to ask out that person again. This enhances your confidence. On contrary, if the person rejects you for the date, this is considered a cost, because due to rejection you might hesitate to ask someone out on a date in future.
Social exchange theory also comes into play when you make decisions about your career. Let’s understand through an example, a man named Jay has just graduated from a renowned college and gets a job offer from a good company. Initially, he loved the job but soon he realized that the manager is not appreciating his work, and he is facing difficulty in finding a work-life balance. Jay thinks of quitting the job and starting his own business to be his own boss and to find a good work-life balance. But, he got the promotion and now working under a manager who appreciates his work and gives him the appropriate feedback. Jay now revises his previous evaluation and decides to drop the idea of quitting the job as he finds more benefits in this decision now rather than quitting the job.
The employee and the employment relationship is an optimum example of social exchange theory. An employee tends to give their best when they receive benefits from the employer such as an optimum working environment, appropriate feedback and good wages. Here are a few examples that show the applicability of the social exchange theory in the workplace.
- The employees in the company, who give their hundred per cent in every assigned project may lose their motivation to work hard and eventually lose productivity if they will see that they are not receiving any extra benefits than the employees who perform average. Organizations or companies use the concept of social exchange theory in boosting the productivity of the employees. The tags like ’employee of the month,’ ‘best employee,’ or any token prizes serve as benefits for the employees. The employee feels motivated to work if they are aware they will receive these tags or prizes.
- A study shows that only 33 per cent of the employees feel that they are being appreciated at their work. Employees tend to leave their jobs when they are not being appreciated for their work and try to settle at the jobs where they feel a more important part of the organization. Hence the companies may organize some programmes that appreciate the work of the dedicated employees. Here appreciation works as the benefits and lack of attention towards their hard work represents the cost.
- Social exchange theory can help the management of the company in improving its work culture. Even though salary seems to be the most important benefit to the employees, this is not the only factor that motivates them to give their best in the organization. The factors like work environment, policies or other regulations that gives the employees a sense of benefits also play a crucial part. The employees keep on switching jobs in the hope of a better working environment if they think the working environment of the current company is not suitable.
A person while choosing his/her life partner tends to weigh all the possible costs and benefits involved in the relationship. For example, a person may consider the fun-loving and caring attitude of the person as a reward even if he/she is not wealthy (cost) or even may settle for the rude behaviour of the partner (cost) if he/she is wealthy (benefit). Rusbult (1983) conducted longitudinal research for about seven months on heterosexual college students. The subjects were provided with the questionnaires to answer after every few weeks. This questionnaire was curated to analyse the strength of their relationships, i.e., how much satisfied and committed they are in their relationships. This study showed that during the initial period of the relationship (honeymoon phase) the partners tend to ignore the principles of the social exchange theory, i.e., exchange of the cost and benefits. However, later, they begin comparing the degree of satisfaction with the cost of the relationship. Another similar study conducted by Hatfield (1989) showed that the partner who feels that he/she is not benefitting from the relationship tends to break that relationship. The results of this study are in the favour of the social exchange theory that the relationships survive only if both the partners share equal proportions of the costs and benefits of the relationship.
The capitalist economy, wherein the producers and the consumer both receive mutual benefits through the exchange of goods and services is also a prominent example of social exchange theory. The producer receives the monetary expenses (benefit) and the customers receive the quality product (benefit). The consumer can analyse the benefits or costs involved in this exchange by evaluating the quality of the product or the service received.
Strengths of Social Exchange Theory
- This theory is very simple and gives a border look at how and why do people engage in or terminate any relationships.
- The understanding of this theory can help the couples or even business partners to make the right decisions that whether they should stay in the relationship or business partnership or not. Simply, according to this theory, if there are more costs than benefits in any relationship, it needs to be terminated.
- Social exchange theory helps the researchers and the counsellors to understand the reason behind the failed marriages, problems in child-parent relationships or other family issues. Counsellors may benefit their clients by helping them in improving their relationships, for example, the relationships between the family members, spouses, colleagues, or friends. They can help their clients in enhancing the quality of their relationships by making them aware of the involved benefits. As discussed earlier in this article, people compare their relationships on the basis of past experiences. Some people tend to stay in toxic relationships only because they compare their current relationships with the similar unhealthy or violent relationships they had in their past. Hence, social workers can help these people they should terminate their relationship as they are not getting enough benefits in this relationship.
- The knowledge of the social exchange theory can help people to understand what are the real costs or the benefits, rather than falling victim to relationships where only one partner or organization receives the majority of the benefits and others face the cost.
- The social exchange theory can help social workers to motivate their clients for positive behaviour and interactions in society. This theory guides social workers that every person looks for a reward in the relationships. Clients tend to believe the social workers if they provide more positive outcomes to them rather than negative outcomes. Hence, social workers should enhance the interactions that promote more benefits to the clients.
Limitations of Social Exchange Theory
Social exchange theory has several weaknesses as it fails to discuss other perspectives. This theory explains the relationships in terms of only costs and benefits, i.e., if people are getting benefits they tend to stay in the relationships but if it is costing them a lot they tend to terminate those relationships. This theory does not consider the involvement of factors such as emotional and psychological factors in relationships. This theory strongly argues that people look for their own benefits in every relationship, but this is not always true. Altruism or selfness are not the only factors that are responsible for the relationships, there are several examples where people happily work for the benefit of their loved ones even if it is costing them a lot. This theory does not talk about the people who prefer to stay in the relationships even if they are costing more than the benefits. Although these examples are usually found in the case of the relationships between the family members or romantic relationships as in other cases like business relationships, people are more likely to weigh the pros and cons. Hence, the perspective of the social exchange theory can apply to some types of relationships, but can not be generalised to explain every relationship.