Social Exchange Theory

What is social exchange theory?

According to social exchange theory (Thibaut & Kelley, 1959), social behavior involves social exchanges where people are motivated by obtaining something of value (reward) in exchange for forfeiting something else of value (cost).

In social exchanges, like economic exchanges, people seek profit. They become disturbed when an exchange lacks equity, or when others are rewarded more for the same costs (Redmond, 2015).

Social exchange theory addresses three questions. Firstly, the question of how people make decisions about how much they are willing to give in exchange for a particular reward. Secondly, what factors influence people to pursue or terminate relationships.

And lastly, why people feel resentment when they believe they have put more effort into sustaining a relationship than their partner (Redmond, 2015).

Origins of the Theory

Social exchange theory has its roots in Homans’ (1958) paper Social Behavior as Exchange. The idea was simple. Homans contrasted the actions and exchanges of individuals with the actions of institutions, arguing that one shapes the other.

Blau’s (2017) Exchange and Power in Social Life built on Homans’ focus on groups and institutions to lay the theoretical foundation for social exchange theory.

Unlike Homans, who emphasized psychology as the foundation of human decision-making, Blau’s vision of social behavior paralleled microeconomics. He called it “social exchange theory” (Cook and Emerson, 1987).

Many later theories build on these foundational principles. Some apply social exchange theory to a specific concept; others expand the theory itself.

Social Exchange Theory (SET) Explained

Redmond (2015) sets out five guiding principles of social exchange theory:

1. Behavior as exchange: social behavior can be explained in terms of costs, rewards, and exchanges, loosely applying economic reasoning to human decision-making.
2. Maximizing profit: people seek to maximize rewards and minimize costs, reflecting a belief that people are generally motivated by self-interest.
3. Interdependence: social interaction involves two parties, each exchanging a reward the other needs (Burns, 1973). To get rewards, people must offer something in return, which creates interdependent relationships.
4. Applies to relationships: the theory can explain how interpersonal relationships develop and are managed, once its economic principles are adapted sociologically. This led Altman and Taylor (1973) to develop social penetration theory to describe relational development.
5. Applies to groups: social exchanges also affect relationships among group and organization members. Blau (2017) discussed how the need for advice and assistance leads to exchanges among group members.

A relationship that once felt high-reward or low-cost can shift toward more cost and less reward. When that happens, a person may either accept a lower reward level or end the relationship.

Group exchanges fortify group structures. Those who give advice are rewarded with respect, prestige, or reciprocal help from the person they assisted.

Seeking advice can start a mutually beneficial relationship, but the exchange has to stay roughly equitable for the relationship to continue.

Costs vs. Benefits

Rewards are the amount of benefit that someone receives from a relationship. Rewards can be abstract (such as love and companionship), or concrete (such as goods and services) and are immediate or cumulative.

Ultimately, costs demotivate relationships; however, people must trade something of value (cost) for something they need or value (rewards). Like rewards, they can be either abstract or concrete and exist instantaneously or cumulatively.

In a relationship, people gain rewards, such as a partner’s attention, sex, gifts, or a boost to their self-esteem. They also incur costs: spending money on gifts, or compromising on how they spend their time.

There is an opportunity cost too. Time spent with a partner in a relationship that never develops could have gone to another partner with better long-term prospects.

How much value a person places on each cost and benefit is subjective.

For example, some people want to spend as much time as possible with a partner early in a relationship, seeing this time itself as a reward. Others feel differently. They value their own space, and see long periods together as a necessary investment rather than a reward.

Profit, as in economics, is rewards minus costs. Positive outcomes happen when there is a net profit, and negative outcomes happen when there is a net loss.

Thibault and Kelley (1959) also identified a number of different stages of a relationship:

1. Sampling: partners consider the possible costs and benefits in the new relationship through direct or indirect interactions and compare it to other relationships available.
2. Bargaining: partners exchange costs and benefits; they negotiate and identify what is the most profitable.
3. Commitment: the relationship is stable and maintained by a predictable exchange of rewards.
4. Institutionalization: partners have established norms in terms of costs and benefits. They now settle down.

Expectations and Comparison Levels

The comparison level (CL) in a relationship is a judgment of how much profit a person receives, that is, benefits minus costs. The CL needed to keep pursuing a relationship changes as a person matures, shaped by external and internal factors.

External factors shape the CL too. The media can raise it: younger people may want more from a relationship after seeing images of romance on film and television.

Seeing friends and family in relationships matters too, since people whose parents divorced or separated may hold a different CL than those whose parents stayed married. Past relationships shape it further, teaching a person to expect more or less from a partner.

Self-esteem matters too. Internal perceptions of self-worth directly affect the CL a person believes they deserve in a relationship.

Cumulative rewards and costs are the total a person has built up over the course of a relationship. Because profits accumulate this way, people do not end a relationship the moment costs exceed rewards on a single occasion.

People also assess potential, not just current, rewards and costs. Thibaut and Kelley (1959) argue this matters most at the start of a relationship and during its stabilization phase.

Communications scholar Michael Sunnafrank (1986) calls this evaluation of likely positive and negative outcomes predicted outcome values.

Evaluating the Alternatives

Comparison level for alternatives (CLalt) refers to a person’s judgment of whether they could be getting fewer costs and greater rewards from another alternative relationship with another partner.

Steve Duck (1994) suggested that a person’s comparison level for alternatives is dependent on the level of reward and satisfaction in their current relationship. If the CL is positive, then the person may not consider the potential benefits of a relationship with another person.

People evaluate the costs and rewards of a relationship in terms of how they compare to expectations. People are likely to continue relationships that exceed their expectations and cut off those that fall short.

Research Examining Social Exchange Theory

Rusbult (1983)- carried out a longitudinal study over a seven-month period on heterosexual college students. The participants completed questionnaires every few weeks.

He found that satisfaction, investment, and alternatives predicted how committed they were to their relationship and whether it lasted.

He also found that during the “honeymoon” phase of the relationship, the balance of exchanges was ignored; however, later on, relationship costs were compared with the degree of satisfaction.

This supports the theory because it shows the importance of rewards in a relationship and comparison levels. It also suggests that the SET is best applied to the maintenance of relationships.

Hatfield (1989) studied people who felt over or under-benefited. The under-benefitted felt angry and deprived, while the over-benefited felt guilty and uncomfortable.

This supports SET theory by suggesting that regardless of whether individuals benefit, they do not wish to maintain a relationship that is unfair. This also highlights a weakness of SET; it ignores equity.

Power

A number of social exchange theorists focus on power. These theories treat power as resting on one person’s ability to control or manage another by meeting, or withholding, that person’s needs.

Emerson (1962) formalized this insight as power-dependence theory: one person has power over another to the extent that the second person depends on them for something they value. That dependence is itself a function of how many alternative sources of that resource the second person has.

Withholding rewards or punishment can trigger negative actions (Blau, 2017). For example, an employer can withhold a bonus until an employee meets a work standard.

That power exists because employees typically have few alternative sources of income; an employee with many other job offers has far less reason to comply.

Social structure can also define power. The position of “employer” gives whoever holds it the power to fire an employee, and this power comes from the position itself, not the individual in it.

Blau (2017) extended this into a more structural argument: exchange relationships generate power differences whenever one party has resources the other needs but cannot easily obtain elsewhere.

Social structures built on power also tend to carry unequal rewards, since employers are usually paid more than employees.

Exchange mediates this whole system. Social structure is both a product of social exchanges and a constraint on them (Cook and Whitmeyer, 1992). It shapes power constraints too, for example who can interact with whom inside an organization.

This has its own name. Researchers call the study of how power shapes people’s access to other organization members exchange network theory (Redmond, 2015).

Central to Emerson’s framework is the exchange relation, not the individual, as the unit of analysis. Turner (1978) argues this shift made exchange theory less reductionist and less tautological.

Emerson went further. Rather than emphasizing how much individuals value rewards, he tried to understand the structure of the networks and groups that these exchange relations sit inside. This focus on relations, not individuals, set Emerson apart from Homans and Blau (Cook and Emerson, 1987).

Risk and Uncertainty

Cook and Emerson (1978) established that people are more likely to form committed exchange relationships when they are in an uncertain environment. Committing reduces how much people seek alternative relationships, which in turn reduces the inequalities of power within the exchange.

Kollock (1995) also notes that uncertainty creates higher feelings of trust between exchange partners. Yamagishi et al. (1998) explain this heightened trust.

Certainty cuts the other way. When there is low uncertainty, individuals are more likely to maximize their access to rewards by avoiding commitment.

However, in uncertain situations, people commit to avoid possible exploitation by new partners (Cook and Emerson, 1987). Different types of exchange vary in how much risk and uncertainty they involve.

The type of exchange matters. For example, reciprocal exchanges usually build more trust than negotiated exchanges with binding agreements (Molm, 2010; Cook and Emerson, 1987).

Relational Cohesion

According to Lawler and Yoon (1993), positive emotions and then feelings of cohesion and solidarity develop from the belief that the outcomes of exchanges are positive and frequent.

The reverse is also true. People have fewer positive feelings and are less likely to commit to exchanges that do not generate positive feelings or that are infrequent.

Anthropological theories attempting to link exchange and solidarity have complexified social exchange theory by detailing exchange theory’s emotional basis. It has connected social exchange theories to the study of social commitments (Lawler, 2009) and social order.

Lawler et al. (2008) go further. Reciprocal, negotiated, generalized, and productive exchange each reflect different emotional responses. Each also shapes how a person thinks of themselves in the group, and their attachment to it.

These bonds are strong in joint activities and exchanges that promote a joint sense of responsibility.

Critical Evaluation

Several distinct criticisms have been raised against social exchange theory:

1. Subjectivity of measurement: operationalizing rewards and costs is hugely subjective, so most supporting research relies on artificial laboratory settings, which weakens real-world validity.
2. Reverse causality: Argyle (1987) asks whether dissatisfaction produces this comparison-level judgment, or the reverse. The theory may justify feelings rather than explain them.
3. Ignores equity: it says nothing about fairness itself, so it cannot explain why an even trade of rewards and costs can still feel unjust to one partner.
4. Ignores prior investment: it does not account for how much a person has already invested in a relationship, only its current rewards and costs (see Rusbult’s investment model of commitment).
5. Overly rational and reductionist: it assumes people consciously and continuously calculate costs and benefits, and reduces human interaction to costs, rewards, profits, and exchanges alone.
6. Reward values are hard to compare: the same reward, or cost, such as ten dollars, is worth very different amounts to different people (a homeless person versus a millionaire), which makes objective measurement difficult.
7. Ignores roles and social structure: obligatory, role-based exchanges (for example, an office worker attending a required meeting) happen without any real option to negotiate, something the theory does not explain.

Subjectivity of Measurement

Most studies used to support social exchange theory rely on artificial procedures carried out in laboratory settings. This is because operationalizing rewards and costs is subjective.

What counts as a reward, and how much it’s worth, is a personal judgment. Judgments differ. That makes it hard to compare outcomes across people or relationships.

A lab lets researchers assign and measure rewards and costs precisely, but this control has a cost. Behavior in an artificial task may not reflect how the same person weighs rewards and costs in a real, ongoing relationship.

So the external validity of these findings remains limited.

Overly Rational and Reductionist

Homans built social exchange theory partly on observations of how pigeons respond to reinforcement, not on studying human decision-making directly. Scholars have questioned this foundation ever since (Redmond, 2015).

The central objection is that the theory assumes people consciously and continuously calculate costs and benefits, when real decision-making may be far less rational than that.

A related criticism is scope: the theory considers only costs, rewards, profits, and exchanges, which critics call overly reductionist for something as complex as human interaction.

Scope matters too. Later research on power, equity, and interdependence has added nuance to the theory.

Even so, scholars still judge social exchange theory poor at meeting its own explanatory goals (Redmond, 2015).

Practice tells a different story. Real-world application: social exchange theory is used in Integrated Behavioral Couples Therapy, where couples learn to increase positive exchanges and decrease negative ones. Christensen et al. (2004) found this approach led to significant improvement in two-thirds of the 40 couples in their study.

This practical success gives the theory real mundane realism: whatever its theoretical limitations, social exchange theory is genuinely useful for improving real relationships.

References

Argyle, M., & Crossland, J. (1987). The dimensions of positive emotions. British Journal of Social Psychology, 26(2), 127-137.

Altman, I., & Taylor, D. A. (1973). Social penetration: The development of interpersonal relationships: Holt, Rinehart & Winston.

Beebe, S. A., & Masterson, J. T. (2003). Communicating in small groups. Boston, MA.

Blau, P. M. (2017). Exchange and power in social life: Routledge.

Christensen, A., Atkins, D. C., Berns, S., Wheeler, J., Baucom, D. H., & Simpson, L. E. (2004). Traditional versus integrative behavioral couple therapy for significantly and chronically distressed married couples. Journal of consulting and clinical psychology, 72(2), 176.

Cook, K. S., & Emerson, R. M. (1978). Power, equity and commitment in exchange networks. American sociological review, 721-739.

Cook, K. S., & Emerson, R. M. (1987). Social exchange theory.

Emerson, R. M. (1962). Power-dependence relations. American sociological review, 31-41.

Homans, G. C. (1958). Social behavior as exchange. American journal of sociology, 63(6), 597-606.

Lawler, E. J., Thye, S. R., & Yoon, J. (2008). Social exchange and micro social order. American sociological review, 73(4), 519-542.

Lawler, E. J., Thye, S. R., & Yoon, J. (2009). Social commitments in a depersonalized world: Russell Sage Foundation.

Lawler, E. J., & Yoon, J. (1993). Power and the emergence of commitment behavior in negotiated exchange. American sociological review, 465-481.

Molm, L. D. (2010). The structure of reciprocity. Social psychology quarterly, 73(2), 119-131.

Redmond, M. V. (2015). Social exchange theory.

Rusbult, C. E. (1983). A longitudinal test of the investment model: The development (and deterioration) of satisfaction and commitment in heterosexual involvements. Journal of personality and social psychology, 45(1), 101.

Sunnafrank, M. (1986). Predicted outcome value during initial interactions: A reformulation of uncertainty reduction theory. Human Communication Research, 13(1), 3-33.

Thibaut, J. W., & Kelley, H. H. (1959). The social psychology of groups. Routledge.

Turner, J. H., & Turner, P. R. (1978). The structure of sociological theory: Dorsey Press Homewood, IL.

Yamagishi, T., Cook, K. S., & Watabe, M. (1998). Uncertainty, trust, and commitment formation in the United States and Japan. American journal of sociology, 104(1), AJSv104p165-194.

Further Information

• Cook, K. S., Cheshire, C., Rice, E. R., & Nakagawa, S. (2013). Social exchange theory. Handbook of social psychology, 61-88.
• Social Exchange Theory