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Social Exchange Theory
Communication Context Interpersonal, Small Group, and Organizational Questions It Addresses in Our Every Day Lives:
- How do we go about making decisions about what are willing to we give up (time, freedom, money) in order to gain something (love, services, goods)?.
- What factors influence our decisions to pursue, sustain, or terminate a relationship?
- Why do we feel resentment when we feel we’ve put more into a relationship or sacrificed more to sustain it than our partner? Theory in a Nutshell ● Social behavior often involves social exchanges where people are motivated to attain some valued reward for which they must forfeit something of value (cost). ● We seek profits in our exchanges such that rewards are greater than the costs. ● We are disturbed when there is not equity in an exchange or where others are rewarded more for the same costs we incurred. Visualization of Social Exchange Theory Exchange = Trade something of value (cost) for something needed/valued (reward) Rewards – Costs = Positive Outcomes (profits) or Negative Outcomes (net loss) Inequity = Cost > Reward or My Costs > Your Costs or My Rewards < Your Rewards
“ As I might have anticipated, my theory therefore got stuck with the name of ‘exchange theory.’ This was too bad, not only because the theory is not limited to social behavior that looks like exchange but also because it suggested that the theory was a special kind of theory, whereas it is a general behavioral psychology, admittedly applied to a limited range of social situations.” G. C. Homans (1984, p. 338). A friend, who doesn’t own a car, needs a ride home on Saturday to attend his sister’s wedding; it’s a ninety mile round-trip. He offers to pay for gas and give you five dollars. You have tentative plans for Saturday and two hours of driving for five bucks doesn’t seem that appealing, but this is a friend in need. After you hesitate, your friend then offers you ten dollars and lunch, so you finally agree. In this exchange, both parties reach an agreement based on a comparison of how much something is going to cost relative to the level of reward or benefit that something will provide (a ride home for the friend and ten dollars and lunch for you). Sociologist George Homans (1950, 1958, 1961) proposed examining such an interaction as an exchange following certain basic economic principles revolving around rewards and costs. For you the costs include wear and tear on your car and giving up two hours of your time; the rewards are ten dollars, a free lunch, and providing support for a friend and gaining his appreciation. Since your friend is desperate for a ride, you probably could have asked for twenty or thirty dollars but such a demand could raise questions about what kind of a friend you are. Homans argued that in general, two or more parties try to get something that is of greater value to them than the cost they incur. In this example, you and your friend probably both feel good about what you’re getting out of the exchange--you both feel you’re getting more out of the exchange than you’re
application of basic economic concepts has led to today’s elaborate theories of social exchange, social behavior, and equity. Homans (1958) advocated that scholars return to what he described as the oldest of theories of social behavior--“social behavior as exchange (p. 606).” Interestingly, in his early writings, Homans, never uses the phrase “social exchange theory.” In examining social behavior as exchange, Homans (1961) drew upon behaviorism to explain human behavior as comparable to the behavior of pigeons receiving rewards of corn for pecking a target (cost). He also drew upon his background research and theory related to small groups, in particular, issues of social influence, equilibrium, cohesiveness, and conformity. Peter Blau (1964) greatly expanded on the importance of the “social” context to which economic and exchange principles were being applied. He noted that social exchanges differ from economic exchanges in that terms of social exchanges are not spelled our per se, but rather left for a given individual to decide. Suppose you had given your friend the ride home without any payment or lunch. You would expect that at some point your friend would “repay” the favor—perhaps invite you to dinner or give you a gift at some future point. In this social exchange, the only operating premise is that if you do a favor for someone, some reciprocal favor of equal value would be returned. Blau also saw social rewards and social benefits as being uniquely dependent upon personal relationships. As you can tell, many scholars have been involved in the development of social exchange theory, each emphasizing concepts that best fit their own application. As such, social exchange theory has been applied to almost every type of social situation – organizational management, consumer buying decisions, television viewing, politics, marriage, and decisions to terminate romantic relationships. However, because of the diverse contributions and directions taken,
there is not really any one set of accepted concepts and propositions that is called social exchange theory. Purists claim it is not a theory—but we’re not such purists. Our review here reflects the most common elements and propositions associated with social exchanges that are particularly related to communication. In this chapter we will begin with the basics of social exchange theory as they were developed from an application of principles drawn from economics, psychology, and sociology particularly as related to small groups. We will then turn our attention to how this theory has been specifically applied to communication and personal relationships. THEORY ELEMENTS Rewards and Value of a Reward Homans drew upon economics in developing his theory. In considering rewards he decided that some of the economic terms and conceptualizations did not apply as well to social behavior. He used the phrase “value of a reward” to emphasize the notion that any given reward might have different value to different people. A reward of five dollars has a lot more value to a homeless person than to a millionaire. Homans’ definition of value is within the context of a social exchange and thus is different from other ways of defining value. Homans (1961) wrote, “A man emits a unit of activity, however that unit be defined, and this unit is either reinforced or punished by one or more units of activity he receives from another man or by something he receives from the non-human environment (p. 39).” Reexamining our opening example should help you get a better handle on Homans’ definition. Driving a friend home was your unit of activity for which you were paid and got lunch (the unit of activity received from another) which is reward you received. Remember in our example, that you didn’t place much value on the initial reward; so as the value of the reward increased, you were more willing to exchange your unit of activity (drive).
providing a favor (driving the friend home). Such extrinsic social rewards usually represent costs to the people providing them; a cost which they expect or anticipate will result in a greater rewards for them. Giving a friend a gift might be in hopes of increasing the other person’s attraction or affection for the gift giver. Costs Homans (1961) originally defined costs as something of value that is given up; it can also be the withdrawal of a reward, or punishment. Money is the most obvious “cost” that we exchange for some product or service, though we might also give friends money just to help them out. We also work in exchange for money which involves giving our time, energy and skills. But what about spending time with friends? What does it “cost” you to carry on a conversation? What does it “cost” you to be in a relationship? Carrying on a conversation costs you time and energy; time and energy that you might have been spent doing something else, even something more rewarding. The amount of time and energy expended in a conversation is affected by its importance and its intensity and depth. Besides costing time and energy, relationships necessitate forfeiting some of your freedom and independence. Just as with rewards varying in their value, so do costs. The value of your time varies depending upon the demands placed on your time. If you’re hanging around doing nothing and a friend stops by to play some video games with you, then the cost is not very high. If on the other hand, you’re cramming for an important exam and a friend stops by in tears after a break up, the time you spend comforting your friend represents a higher cost. Blau (1964) observed that in selecting to spend time in one relationship we forfeit the opportunity to spend time in another relationship which potentially could be more rewarding. According to social exchange theory, the costs we’re willing to expend on a relationship relates to the rewards and thus its “profit.”
Profit Profit = Reward minus Cost. This simple economic formula was presented as applicable to social exchanges by Homans (19 61 ). The implication of this definition is that the greater the rewards and the fewer the costs, the greater the profit a person gains. While such a formula fits well for economic activity, its application to social exchanges is more complex and not as straightforward. Profits affect our decisions regarding our communication and relationships. We seek interactions which are profitable—we feel greater reward than cost. Think about your relationship with your best friend. Your level of satisfaction and enjoyment is probably related to how rewarding that relationship is compared to what it costs—how profitable the relationship is. The process and effect of profits on relationships is described well by Levine, Kim, and Ferrara (2010): “… people in relationships have a metaphorical spreadsheet in which relational credits and debits are tabulated, and future profits are forecast. People are satisfied with their relationships when the rewards exceed the costs, and they continue in those relationships where investments lead to projected future profit. Equity and Distributive Justice While gaining a profit is desirable, we often find ourselves dealing with simply achieving a “fair” trade, or an equitable trade. We are concerned with our reward being proportionate to our degree of cost: the more cost we incur, the more we expect the reward to be. Suppose you spent 10 hours on a class project and got a “C” on it, while a friend of yours spent 2 hours on the project and got a “B.” You’d probably be upset because it doesn’t seem fair. In relationships, equity is often based on partners seeking relationships where the ratio of rewards and costs are the same for both partners. Underlying feelings of equity is an awareness
you lent a classmate five dollars you’d probably expect it back at the next class meeting but you’d probably give your best friend as much time as needed. The second factor that affects equity is our assessment of the costs and rewards relative to the partners’ abilities to provide them or the relative “availability of resources” (Mitchell, et al., 2012). Suppose your boss invited you to dinner and fixed an elegant meal of filet mignon, fine wine, and crème brulee. To achieve equity, you invite your boss to dinner and serve grilled hamburgers, beer, and brownie sundaes. Are you even? Your boss’s meal cost a lot more than yours, but your boss is likely to perceive the exchange as equitable. As discussed earlier, the costs are relative to the means of the parties involved, but equity depends upon each party’s ability to recognize and adjust their evaluation of both party’s costs and rewards. What is important to recognize in this example and in most social exchanges, is that evaluations of equity and fairness are psychological rather than physical (Messick & Sentis, 1983); that is they rest in the minds of the participants. As such, perceptions of fairness are subject to bias and thus open to differences in the perceptions of the two partners. Such differences might cause anger, guilt, resentment, and even conflicts. Now, imagine a different situation, one in which you and a friend have been hired to paint a house for $600 and you put in twice as many hours as your friend. How would you feel if your friend claims you should split the money 50/50, both getting $300? You’d probably be unhappy because it’s not fair—you did twice as much work, you should be paid twice as much. Similar to equity, distributive justice involves an outcome of an exchange where the two parties each are rewarded proportionate to their costs or in other words, the more you invest, the greater your return (Homans, 1961). Homans argues that we seek justice when it comes to the level of costs and rewards that are exchanged and when we feel that justice is not being done we get
angry and try to do something about it which might involve avoiding the situation in the future. If you split the house painting fee 50/50 with your friend, you’d probably avoid future shared painting jobs with that friend. One shortcoming of social exchange might be apparent after considering equity. That is, sometimes people remain in situations even when they are inequitable; when social exchange theory would predict leaving the situation. People remain in inequitable situations for lots of reasons, reasons that go beyond the economic-based logic that might dictate otherwise. Have you found yourself in such situations? Perhaps remaining in a job were you felt underpaid for the amount of work you did, or maintaining a friendship where contributed more than your friend? Social Exchange Homans essentially envisions any social interaction between people involving costs and rewards. He initially used the term “social behavior” for what later was called social exchange. He wrote, “Social behavior is an exchange of goods, material goods but also non-material ones, such as the symbols of approval or prestige (Homans, 1958, p. 606),” and later in his writings, social behavior is seen “as an exchange of activity, tangible or intangible, and more or less rewarding or costly, between at least two persons (Homans, 1961, p. 13).” At the intangible level, carrying on a conversation with someone costs you time and energy but can be offset by the rewards gained such as confirmation of your value and development of a relationship. While Homans, Blau, and Thibaut and Kelley wrote about how social exchange theory applies to behavior in groups or organizations, theory also has application to interpersonal relationships. Blau (1964) defined social exchanges as “voluntary actions of individuals that are motivated by the returns they are expected to bring and typically do in fact bring from others (p.
likely to also have implicit expectations. Besides the ten dollars and free lunch negotiated with your friend, you would expect the friend to say “Thanks,” thus providing an additional intrinsic reward. GUIDING PRINCIPLES The economic model of human behavior has three applications that are of particular interest to communication theorists and to this textbook. The first is at the psychological level where we use of costs and rewards as part of our decision making process. We often assess the cost of a particular choice with the benefits that we anticipate or receive. For example, we compare smart phone plans for their costs and benefits (features), we compare potential dating partners on the basis of how much effort a given relationship might take compared to how rewarding it might be, and we also decide whether to stay in a given relationship by assessing the pros against the cons—the rewards against the costs. The second application concerns how we use economic principles to manage our interactions with other people—our social exchanges. In this application, we are involved in the actual exchange of something between two or more people; an exchange, remember, can be for things that are tangible (money, products, food) and/or intangible (acceptance, love, support). The third application is at the relational level where we apply economic principles in selecting and evaluating our relationships, weighing their rewards and costs as well as comparing those to alternatives. These three applications are not mutually exclusive, your decision to pursue a romantic relationship might be because your assessment of the pros and cons of the relationship are affected by the fact that your exchanges with your partner have resulted in profits. Our primary concern in reviewing this theory is its specific applications to human communication so we have omitted less relevant principles. Our decisions to communicate with
others are often influenced by our assessment of the costs and rewards of such interactions. Your decision to visit a teacher after class probably involved some weighing of the costs (such as time and potential embarrassment) against the potential rewards (learning information that will improve your grade or developing a positive relationship). Exchanges by their very nature are communication events. Some exchanges are conducted without explicit conversation while others involve detailed negotiations. Many roommate discussions have been evoked trying to maintain equitable arrangements for doing dishes and housecleaning. As you read the following principles related to social exchange theory, try to keep in mind how these apply to communication and your own relationships with others. Principle 1: Social behavior can be explained in terms of costs, rewards, and exchanges. Another prominent figure in developing social exchange theory was sociologist Richard Emerson who described exchanges simply as “the economic analysis of noneconomic social situations (Emerson, 1976, p. 336).” This first principle loosely applies economic concepts to human decision making and interactions. Consider your own decisions, particularly those dealing with communication choices and relationships. To what degree do you evaluate the pros and cons, the reward and costs, as a way of helping you decide? Principle 2: People seek to maximize rewards and minimize costs in pursuit of the greatest profit. This principle reflects a claim that people are motivated by a fairly strong self- orientation. People “behave in ways to increase positively valued resources and decrease negatively valued resources (Mitchell, Cropanzano, & Quisenberry, 2012, p.100).” Such behavior results in the most profitable outcomes. This general principle potentially applies to any decision you make—where to go to college, what to major in, where to live, what job to
Principle 4 : Social exchange theory can be used to explain the development and management of interpersonal relationships. While economic principles provide a framework for understanding social behavior, our behavior in interpersonal relationships requires some specific adaptation of those principles. Altman and Taylor ( 1973 ) created social penetration theory (Chapter 13 ) to explain relational development by using social exchange theory to explain the self-disclosure in escalating relationships. Thibaut and Kelley (1959) discussed the how social exchange impacts the initiation of a relationship: “If good outcomes are experienced in initial contacts or if these contacts lead the persons to anticipate good outcomes in the future, the interaction is likely to be repeated (p. 20).” Thibaut and Kelley (1959) recognized that being in a relationship is not simply a matter of asking yourself “Am I getting the most reward right now?” The complexity of relationships is reflected in the variety of social exchange assessments we make. Outcomes : This concept is the level of current rewards and costs associated with a given relationship; essentially, it’s the profit you’re making at this moment. Comparison Level : We evaluate the rewards and costs of our relationships in terms of how they compare to what we expect or believe we deserve in such a relationship. Think about your relationships where the profits exceed what you believe you deserve/expect. Now think about those relationships that you have or had that fall short. We are likely to continue those which exceed expectations and less likely to continue those that fall short. How well does this principle apply to your experiences? Comparison Level for Alternatives : This concept involves comparing the rewards and costs of other potential relationships to a given relationship (either current or prospective). If another relationship is perceived as potentially providing greater profits than a current
relationship, we are likely to leave the relationship for the alternative. Such a change often occurs as you shift from high school friendships to college friendships when the college friendships prove more rewarding and less costly than those from high school. Forecasted Rewards and Costs : We assess the future of our relationships, evaluating the potential rewards and costs. Thibaut and Kelley see this particularly applicable in the beginning of a relationship and as a factor in the stability of a relationship. If we are happy with a given relationships profits and forecast that they remain the same, we are likely to continue the relationship, but if we predict the costs might come to exceed the profits, we are likely to deescalate the relationship. Communication scholar, Michael Sunnafrank argues that our goal of maximizing outcomes leads to evaluating the likelihood of positive or negative outcomes if we pursue a given relationship; he calls this predicted outcome value. In considering your own experiences you have probably made some incorrect predictions, both pursuing relationships with negative outcomes and missing opportunities to pursue relationships with positive outcomes. Cumulative Rewards and Costs : This assessment represents the sum total of the rewards and costs (profits) a person receives over the history of the relationship (Altman & Taylor, 1973). We tend to remain in relationship where we are making a profit and in a way, those profits become part of our relational savings account. This concept explains why we don’t immediately end relationships the moment the immediate costs exceed the rewards. We have an investment in long-term relationships of accumulated rewards and costs that we don’t want to simply abandon. In essence, we stay in such relationships, drawing from the savings account to offset the costs until the situation improves or we run out of savings. In a study by Levine and
you can have social relationships with economic or social exchanges, and economic relationships with economic or social exchanges. Buying a hamburger at McDonalds is an economic relationship with an economic exchange. Having a personal conversation with cashier at McDonalds represents the economic relationship with a social exchange. THEORY EVOLUTION, AMMENDMENT, QUESTIONS and CRITICISM Theory Evolution : Rather than being modified and improved upon, social exchange theory is like a tree with many branches growing from the core concepts. Some branches involve the application of the concepts to a specific context such as interpersonal relationships, other branches focus on a given principle into which new concepts are added. The following discussion provides some examples of how this tree has grown. A significant amount of scholarship has focused on social exchange as it relates to power. Power can be based on one person’s ability to meet the needs of another person and to therefore control and manage that other person through the disbursement of rewards. Emerson ( 1962 ) appreciated that power was a relational phenomenon that resides in a person’s dependency. He also recognized that not every interaction was about power, rather power existed as a potential. Power can also involve negative actions by either withholding some reward until an action is taken or by punishment (the infliction of costs) (Blau, 1964). Since a significant amount of work on social exchange theory occurs within sociology, it is understandable that interest in power focused on its effect in the development of social networks and social structure. In this sense, power that defines relationships—who are the bosses and who are the subordinates. Social structure partially defines the power relationships. Your boss has the power to fire you simply because of the position your boss holds. That
position gives the boss control over rewards or punishments but it is based in the position rather than the person. In addition, the social structure represents unequal distribution of the rewards— your boss is paid more than you, you’re paid more than the new guy. The social structure is also comprised of a network of social exchange relationships in which individuals exchange rewards and costs, deal with inequity, and often work toward distributive justice. Sociologists, Cook and Whitmeyer (1992) note that social structure is a product of social exchanges, but it is also a constraint to those exchanges. Your access to members of an organization, and therefore your opportunities for social exchange, are constrained by the organizational structure and hierarchy. This branch of the three is sometimes referred to as exchange network theory. Questions and Criticisms : Some of the criticisms of social exchange theory are tied the original propositions and assumptions made by Homans. Those criticisms lead to the changes in social exchange theory that even include the way rewards and costs are conceptualized (as seen in the power dependency model). One of the most prominent questions raised about the theory is the degree to which humans really are as rational and calculating as social exchange theory would lead us to believe. How often in your relationships are you assessing the rewards and costs, determining the profit, projecting the future, and comparing to alternatives? While you probably do it sometimes, you are not likely to be in a state of constant accounting. For example, can you really calculate the size of the savings account with your best friend that has built up? Our estimates of costs and rewards are probably more impressionistic than calculated; the exceptions being when we are actually exchanging objects of specific value such as exchanging $3,000 for a used car. Homan’s analysis of human behavior relied more on the principles of operant conditioning principles (based on observations of how pigeons react to reinforcements) then on calculated decision making and rationality.
