Social Exchange Theory - Basic Concepts

Basic Concepts

Costs are the elements of relational life that have negative value to a person, such as the effort put into a relationship and the negatives of a partner. (Costs can be time, money, effort etc.)

Rewards are the elements of a relationship that have positive value. (Rewards can be sense of acceptance, support, and companionship etc.)

The Social Exchange perspective argues that people calculate the overall worth of a particular relationship by subtracting its costs from the rewards it provides.

Worth = Rewards – Costs

If worth is a positive number, it is positive relationship. On the contrary, negative number indicates a negative relationship. The worth of a relationship influences its outcome, or whether people will continue with a relationship or terminate it. Positive relationships are expected to endure, whereas negative relationships will probably terminate.

The Social Exchange Theory explains social exchange and stability as a process of negotiated exchanges between parties.Social Exchange Theory explores the nature of exchanges between parties. As with everything dealing with the Social Exchange Theory it has it’s outcome satisfaction and dependence of relationships. Both parties in a social exchange take responsibility for one another and depend on each other. According to Laura Stafford (2008), economic exchanges and social exchanges have some differences: Social exchanges involve a connection with another person; social exchanges involve trust, not legal obligations; social exchanges are more flexible; and social exchanges rarely involve explicit bargaining.

"The guiding force of interpersonal relationships is the advancement of both parties’ self-interest" — Michael Roloff (1981) Interpersonal exchanges are thought to be analogous to economic exchanges where people are satisfied when they receive a fair return for their expenditures. Fulfilling self-interest is often common within the economic realm of the Social Exchange Theory where competition and greed can be common.

At the the core of the Social Exchange Theory is the outcome derived of subtracting the costs from the rewards. Rewards can be material (economic) or symbolic (attention, advice or status)and typically bring satisfaction to the individual. For example in a relationship, a boyfriend/girlfriend could provide their significant other with security and trust which could be considered rewards within the relationship. Diminished Marginal Utility can occur within an exchange if the reward in question has been received repeatedly, the other party will lose interest in the reward. Costs can be viewed as punishments or discomfort such as physical or emotional pain. In a relationship, if conflict arises often, it could be viewed as a cost. Since individuals have different values, costs and rewards can vary depending on the individual's values and beliefs.

Outcome = Rewards - Costs

George Homan developed five key propositions that assist in structuring individual's behaviors based on rewards and costs. The first proposition, the Success Proposition states that behavior that creates positive outcomes is likely to be repeated. The second proposition, the Stimulus Proposition believes that behavior if an individual's behavior is rewarded in the past, the individual will continue the previous behavior. The third proposition, the Value proposition believes that if the result of a behavioral action is considered valuable to the individual, it is more likely for that behavior to occur. The fourth proposition, the Deprivation-satiation proposition believes that if an individual has received the same reward several times, the value of that reward will diminish. Lastly the fifth proposition, discusses when emotions occur due to different reward situations.