Social Exchange Theory

This is only a brief summary of the lecture. You must refer to articles highlighted in the Essential
Readings section of the course outline if you are to be fully prepared for both the mid-term and
final examinations.

Main Idea
 Exchange theorists believe that interpersonal behavior is guided by principles of social exchange.
 Social exchange is a form of interaction in which two individuals voluntarily provide each other
with resources that each perceives as rewarding.
 People enter exchange relationships with the expectation of receiving a benefit.

Origin
 The major components of Social Exchange Theory originated with George Homans (1961; 1974)
 Homans defined social exchange as “an exchange of activity, tangible or intangible, and more or
less rewarding or costly, between at least two persons”.

Homans’ Contribution
 Homans used theories of learning and economic principles to understand human interaction.
 The basic premise of the theory is that:
o People are sensitive to rewards and cost and thus maximizing profits and minimizing
loses
o We want to interact with people who offer best profit
o The more rewards and fewer cost the more satisfying the relationships
 Homans argued that behavior is a function of payoffs (punishments or reinforcements) provided
by human or nonhuman environments.

Homans’ Assumptions about Human Behaviour:

 There are laws of behavior that are universal
 The laws are applicable to a wide variety of specific behavioural and social fields
 An understanding of operant behavior will give better insight into exchanges between people
 Operant behaviour facilitates the process of awarding status, love and power to individuals
and groups
 Homans’ aim was to explain fundamental processes of social behaviour such as power,
conformity, status, leadership and justice
  Defined the elementary forms of social behavior as the fundamental process of behavioural
exchange.
 The elementary social behaviour is rational and spontaneous and arises out of interaction and a
reaction to others’ behaviour.
 Social groups are the building blocks of larger social units.

Elements of the Social Exchange Process

 Social behaviour - behaviour that is rewarded or punished by others.

 Reward or punishment - involves the individual with which a person is in an exchange
 Actual behaviour - is also an important part of the social exchange process.

Terms used by Homans:

• Activity - voluntary behavior emitted by the person

• Sentiment - the activity that is considered a sign by a symbolic community member of attitudes
and feelings toward another

• Interaction - occurs when an activity or sentiment emitted by one person is rewarded or punished
by another’s activity or sentiment.

• Variables - any element that impact upon interaction. Two major variables are quantity and value

• Quantify - The number of units of activity the person emits within a period of time. Quantity of
activity indicates the state of deprivation of the interacting person as well as their rate of
reinforcement or punishment.

• Value - The degree of positive or negative reinforcement an individual receives from another’s
unit of activity. The greater the positive reinforcement the higher the value of that unit.

Theories of Learning that underlie Social Exchange Theory

Homans expressed his theory with propositions and these learning theories are infused in his propositions.
• Operant learning theory
• Behaviourism (operant conditioning) people repeat behaviors which have been rewarded
in the past
• Social learning theory
• focuses on the learning that occurs within a social context people learn from one another
• Classical conditioning theory
 • Generalization
• Extinction

Propositions of Social Exchange Theory

1. The Success Proposition
 Relates an individual’s action to his success in getting a favorable result. The more often a
particular action of a person is rewarded, the more likely the person is to perform that action.

There is a sequence of at least three events:

a) A person’s action
b) A rewarding result
c) A repetition of the original action or one similar to it

2. The Stimulus Proposition

 If in the past the occurrence of a particular stimulus, or set of stimuli, has been the occasion
on which a person's action has been rewarded, then the more similar the present stimuli are to
the past ones, the more likely the person is to perform the action now.

3. The Value Proposition

 The more valuable to a person the result of his action is, the more likely he is to perform the
action.
 The variable value, may take either positive or negative values.
 The results of a person's actions that have positive values for him are called rewards; the
results that have negative ones, punishments.
 Just as an increase in the positive value of the reward makes it more likely that the person
will perform a particular act, so an increase in the negative value of the punishment makes it
less likely that he will do so.

4. The Deprivation-Satiation Proposition

 The more often in the recent past a person has received a particular reward, the less
valuable any further unit of that reward becomes for him.
 A reward received often may cause satiation. Its value decreases, and the individual
becomes less apt to perform an action that is followed by this reward. Rewards gain value
when deprived (and vice versa)
 5. The Aggression-Approval proposition
 Has two parts:
i. Aggression
o Failure to get expected rewards + Receiving unexpected punishment =
anger and aggressive behaviour
ii. Approval
o Failure to get expected punishment + Receiving expected (or larger)
rewards = happiness and approving behaviour

6. The Rationality Proposition:

 In choosing between alternative interactions, a person will choose that one for which as
perceived by him at that time will receive the greatest rewards.
 By so doing a person is said to maximize his expected utility.

The Rule of Distributive Justice

 Social exchange is based on a justice principle.

 Distributive justice can be defined as the fair share-out of rewards. It is essentially the fairness of
the outcomes received.
 It is the condition in which profits for each person in an exchange relationship are viewed as
proportional to their investments. The greater the investments, the greater the expected profits.

Rewards - anything that a person gains from a relation (love, money, status, info, goods, services)

Costs - negative consequences of a relation (time, energy)

Investments - relevant attributes brought by each party in the exchange (skills, effort, education,
experience, age, sex etc)

Distributive Justice = A’s rewards less A’s costs = B’s rewards less B’s costs
A’s investments B’s investment

Social Exchange Theory

According to social exchange theory people evaluate their outcomes or profits in a relationship by:

• Keeping track of rewards and cost as in accounting

 • This is seldom done explicitly or systematically

• Determining profit through three sources of information:

a) Simple Standards
• The question may be asked- Is my relationship profitable?
• This may be evaluated on the simple standard of the equation
 Profit (Outcome) = rewards  costs

• However people do not just want profits, they want the best possible outcomes. How do
people know if they are getting the best possible outcome?
 Comparative level (CL) and Comparative level of other (CLALT) helps for
understanding how people evaluate their outcomes.

b) Comparison Level (CL)

 This is what we expect and feel we deserve from our relationships
 It is the standard against which we judge our happiness or satisfaction.
 Each person has his/her own CL which is based on prior experience, learning,
personality
 High CL relationships are expected to be rewarding and low rewards are
unacceptable, disappointing
 Low CL relationships are expected to be troublesome and low rewards are
acceptable, tolerable
c) Comparison Level for Alternative CLALT
 This is what we realistically expect we could get in another relationship or situation
 It includes other alternatives currently available and standard against which we decide to
stay or leave the relationship.
 Dependence is the degree to which we feel psychologically linked to our relationship.
It determines whether we are motivated to stay or leave
 High CLalt more dependent on current relationship
 Low CLalt less dependent on current relationship

Optimum Situation: Outcome > CLalt > CL

The outcome of the interaction is greater than the perceived alternatives, which is greater than the
comparison level.
Criticisms of Social Exchange Theory

• The theory is very simplistic, can explain many things thus losing its explanatory value of its core
propositions.
• Some concepts are difficult to measure making it difficult to test the theory. E.g. investment- how
is that measured?
• Rewards and costs are the basis for building and maintaining relationships but how do we account
for and explain altruism with this theory? The theory is therefore limited in explaining behavior.
• The theory makes no assumptions about what is valued but assumes that people will behave in
ways that will produce what they value.
• Homans sees society as the sum of individual behavior but fails to explain the social structure in
which individuals interact.
• There is too much weight on rational behavior assuming that people act rationally when deciding
of exchange.
• The theory is generally limited to dyadic relationships

Applications of Social Exchange Theory

• Explains why some people may not leave unhappy or abusive partnerships (if (CLALT) is not
profitable).
• Explains dissolved relationships when one partner gives more than he receives.
• Crime- persons who do not get the expected rewards in his field of work such as good wages may
turn to a life of crime to compensate for his inequity.
• Explains many family and relationship issues- courtship, marital power, sexual bargaining.
• Social exchange concepts and principles have been usefully applied to several aspects of the
intimate relationships.