Exchange theory example

6 Social Exchange Theory Examples – StudiousGuy

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.

Index of Article (Click to Jump)

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

George C. Homans

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

1. Friendship

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.

2. Dating

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.

3. Career

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.

4. Workplace

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.

5. Relationships

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.

6. Business

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.

Understanding the Social Exchange Theory With Real-world Examples

Humans are cold and calculating by nature. This is what the ‘social exchange theory’ says, and PsycholoGenie explains this with some of its real-world examples.

Did You Know?

Sociologist George C. Homans, who introduced the social exchange theory, belonged to a family that produced 2 US presidents – John Adams and John Quincy Adams.

As humans, we cherish our social relationships which are based on love, respect, and trust for each other. In fact, ever since the first prehistoric humans set foot on the Earth, there is ample evidence to prove that relationships were the driving force behind the development of society. But what if the reasons for such warm bonds were not entirely selfless? What if each of us has an innate desire to gain something from every relationship? This question forms the premise for the social exchange theory, which originated in the late 1950s.

Social Exchange Theory: Definition

This theory believes that people form relationships keeping in mind the costs and benefits involved in them, and not based on emotions alone. It is applicable not only in interpersonal relationships, but also in offices, and fields like anthropology.

Elements of the Theory

Costs: Costs represent the resources one has to contribute to maintain relationship, and represents loss for individual. It includes enduring discomfort, putting in time, effort, and opportunities lost as a result of investing in one relationship instead of another.

Benefits: Benefits are the rewards obtained from a relationship one is involved in, & can include material or immaterial things. These benefits can be affection, support, social status, fun, money, goods, etc.

How Does it Work?

According to this theory, people expect as much from a relationship as they contribute to it, if not more. In other words, the rewards should be proportional to the costs. Positive relationships are those where the rewards outweigh the costs, and such relations are likely to have a good future. Negative relationships represent the scenario where a relationship does not give the desired benefits, despite one putting up with the risks or costs. People are likely to discontinue such relationships. However, the social exchange theory also considers other factors like the alternatives available, how much one is dependent on a relationship, the presence of trust – which makes exploitation unlikely, and so on.

Assumptions of the Theory

♦ Humans are rational beings, and their relationships are based on well-calculated decisions.
♦ People try to avoid risks, and aspire for rewards.
♦ In a comparison of two situations where the same costs are required, humans choose the one which gives the best outcome.
♦ Between two situations which give similar rewards, people go for the one where the least effort is required.
♦ When the nature of rewards in a situation is not clear, people act on the expectation of rewards.
♦ The expectation of rewards varies from person to person; what is inadequate for one might satisfy another.

Criticisms of the Theory

▼ The social exchange theory attributes a selfish motive to all actions, by assuming that all decisions are taken rationally.
▼ It does not entertain the concept of altruism.
▼ This theory is based on the assumption that people only act individually, and ignore group decisions.

Examples

❑ An employee who thinks his hard work is not being acknowledged in the office may switch jobs to one that is more rewarding, or where he gets the same benefits for lesser effort.

❑ A bachelorette, while choosing a prospective groom from several alternatives, may settle for one who is caring, fun, and handsome; things she considers as rewards while accepting the fact that he is not as rich as the others; a potential risk in the relationship.

❑ When an individual needs a commodity which is sold by two vendors, then, in such cases, one vendor often benefits at the expense of the other. The second vendor may offer more concessions, putting up with more costs to attract the customer, when he realizes that the other vendor is lapping up all the profit.

❑ In the movie Jerry Maguire, football player Rod Tidwell decides to form a relationship with sports agent Maguire to earn contracts. However, he soon begins to have second thoughts on continuing their association when he receives no offers for a long time.

❑ A vegetable farmer and a dairy farmer can benefit if they enter into a relationship to exchange their goods.

❑ Kelly spends a lot of time choosing a birthday gift for her brother, but is disheartened when he isn’t excited. Her discontent stems from a lack of attention.

While the social exchange theory may appear extreme, because it attributes all human actions to rational decisions, it does offer an interesting perspective of how our society functions.

Theory of social exchange. -nlpt-LiveJournal

Theory of social exchange.

: nlpt; November 21st, 2016

Social Exchange Theory (T.S.O.)

remuneration should be proportional to the investment, costs (how much you gave, so much you received). nine0020 a variety of COP-theories
theoretical opposition
to the theory of T. Parsons
and structural functionalism
How?
is based on the principle of reinforcement
it focuses on social interaction between people
it is considered by
as a kind of exchange, the relationship
according to the principle “you - to me, I - to you”.
Communicating, people exchange,
invest something in communication, giving to a partner,
receive something from him in return
Example:
Material values:
money
jewelry
things
intangible values:
Psychological
approval
Assitiating
with respect
Aesthetic
Moral Moral Support, etc. The relationship may be interrupted,
if the Option is observed between

and a reward of
Example:
if
you marry
and your marriage partner is far from the expected ideal,
then you, perhaps, will demand a divorce,
i.e., you will try to end the marriage relationship,
considering that
you invest a lot in them,
receiving little in return
Perhaps
you will try to marry another person again,
in order to restore justice,
or even refuse such a form of social interaction as marriage,
considering it initially unfair
Synonym:
The theory of fair exchange
Suggested:
By whom? nine0020 George Homans
When?
1984
Main theses:
social communication depends on those
costs and rewards
which are included in it
Illustration T. S.O.
Harrison A. & Saeed L. (1977)
analyzed 800 dating ads
found that:
women
offer
"good company" that a "pretty woman of high morals" can keep
looking for
“a rich, elderly man with decent intentions”
men
offer
financial security
seek
physically attractive women
this is a typical pattern of mutual satisfaction of needs through the exchange of values among heterosexual individuals
Source:
Social psychology at the turn of the century: Stories, theory, research (Semechkin N.I.)
Mind Map :
© Olga Vinogradova 2016

Tags: social psychology, social networks, sociology, theory

The theory of social exchange spread mainly in the West.
This theory focused on the motives that determine the interaction of people in the aspect of economic relations related to the exchange of goods.

Theorists of the concept of social exchange considered material and spiritual values as the subject of exchange. It is the exchange of these values in all spheres of society, in their opinion, that forms society.
The study of the mechanisms of social exchange contributes to the explanation of social relationships in society. nine0100

The exchange theory was conceived as an attempt to apply the principles and rules of behavioral psychology research, in combination with other ideas, to the sociological problems of understanding the essence of the social. Provided that the theory of exchange was articulated by the scientific community a long time ago, the peak of its development and relevance falls on the 50-60s of the XX century and is associated with the name of George Homans and Peter Blau.

The theory of social exchange by J. Homans

J. Homans (1910-1989) – prominent American sociologist, author of The Human Group (1950), Social Behavior and Its Elementary Forms (1961), The Nature of Social Science (1967) and others.
The main influence on him was the views of V. Pareto and T. Parsons. Homans criticized the theory of social action and identified patterns in human behavior that correspond to different types of social organization.
Homans' concept was a reaction to the crisis of methodology that arose in America after the war. nine0100

Homans tried to explain how the behavior of an individual with his inherent mental characteristics helps to maintain stable social structures.
The sociologist has long observed face-to-face contact between individuals in small groups in industrial plants. This allowed him to identify some patterns of behavior of people in small groups. So, Homans revealed the dependence of mutual sympathy in a group on the frequency of communication between individuals. By the same reason, the sociologist designated the similarity of behavior and the manifestation of feelings among members of a small group. nine0108 According to Homans, the universal incentives that determine the world movement are personal interests.

Sociologist studied elementary forms of social behavior. He identified the determining features of social behavior in human psychology. He also applied the methods of the psychological direction of behaviorism in sociology.
The central definition of Homans' sociology is the notion of social action.

Social action, according to Homans, is the direct contacts of an individual, during which an exchange of values takes place, based on the principle of rationality, i.e. people interact based on a certain interest. They always strive to get the most benefit at the lowest cost. nine0100

The subject of exchange is something that has a social value.
The value of an individual consists of qualities to be exchanged.
But essentially equal exchanges do not exist, which leads to social inequality.

According to J. Homans, human behavior is determined by the rewards that a person received for his actions in the past. Thus, the sociologist defined the principles of reward:

The frequency of repetition of a certain type of behavior depends on the frequency of rewards. In other words, the more a type of behavior is rewarded, the more often it will be repeated. nine0142
When rewarding certain types of behavior under certain conditions, the individual attempts to recreate those conditions.
The higher the reward, the more effort a person is willing to spend in order to receive this reward.
If a person's needs are close to saturation, then he will make much less effort to satisfy them.

Thus, proceeding from these provisions, Homans explains the functioning of all social processes. nine0108 The exchange of rewards and punishments is the basis of social action, and human behavior performs the function of payment.

Homans' theory has been criticized, according to which the presented theory cannot explain the functioning of social objects at the macrolevel.

Theory of exchange P. Blau

P. Blau (1918-2002) - Austro-American sociologist, student of J. Homans, author of the works "Dynamics of Bureaucracy" (1955), Exchange and the Power of Social Life (1964).
However, unlike his teacher J. Homans, the sociologist focused not on the mental motives of behavior, but on sociological interactions in different types of social structures.

The main difference between Blau's theory and Homans' theory is that in P. Blau the exchange relations are immediately institutionalized.

Exchange, according to Blau, is an action that depends on rewards received by some people from others and ends with the end of receiving these rewards. nine0100

Social life is a "bazaar" in which actors interact with each other in order to obtain the greatest benefit.

P. Blau defined the following laws of exchange:

The greater the benefit a person expects, the greater the likelihood of a certain activity.
The more rewards people have exchanged with each other, the more likely the following acts of exchange.
The more often mutual obligations are violated during the exchange, the less the role of negative sanctions (punishments) becomes. nine0142
As the moment of reward approaches, the value of the activity decreases, and the probability of its implementation is significantly reduced.
The more exchange relationships that take place, the more likely it is that the exchange will be governed by the rules of "fair exchange".

Blau extrapolated the laws of exchange to interactions between organizations and other social structures. In their relationship, the exchange is indirect, therefore it is indirect. Factors of normativity and control actively "intervene" in it. This interpretation made it possible for Blau to transfer the interpretation of exchange from the micro level to the meso level. nine0100

P. Blau defined the following types of rewards:

money;
social approval;
respect;
concessions.

Those in power receive the highest rewards. That is why social groups are structured according to the principles of a hierarchy of power, prestige, approval, etc.

Power relations form two forces in the group: on the one hand, the desire for integration, on the other hand, the inclination towards opposition and conflict. The main source of conflict is the imbalance in exchange relations, resulting from the unequal attitude of various associations to the possession of resources. nine0108 Conflict, according to P. Blau, is a source of change, clarification of normativity and values.

Social structures were interpreted by the sociologist as a multidimensional space, which is formed by lines of differentiation. He characterized them as a series of successive levels on an ever larger scale. Let's take an example. The structure of the work collective has a direct social environment - the conditions in the organizational unit where they work. In the structure of the firm, the immediate social environment will be market conditions. nine0100

Blau tried to integrate the theory of exchange and social structure in the context of social interaction.
Exchange theory alone cannot explain complex social structures. Similarly, the theory of social structure alone is not able to explain many relationships and processes in society, because it is deprived of the analytical possibilities of characterizing people's behavior.

P. Blau outlined two "pictures" of social analysis.

The first picture is the result of using the theory of exchange to analyze the micro-processes that are associated with interpersonal interaction. nine0142
The second picture is the active application of the theory of social structure to characterize the macro-processes of society. Here the main problem is the depth and density of the connection between these levels of analysis.

Summing up, it is important to note that the theoretical and practical resources of the theory of social exchange have not been fully exhausted to date.