SOCIAL EXCHANGE THEORY — PART 1

1. What is Social Exchange Theory?

Social Exchange Theory (SET) explains how people decide whether to start, continue, or end relationships by looking at the rewards and costs involved.

The theory sees relationships as a type of exchange between people.

Key idea:

“What am I getting from this relationship, and what am I giving up?”

People generally:

• look at the benefits/rewards they receive

• consider the costs they experience

• compare the relationship with other possible alternatives

• decide whether the relationship is worth continuing

SET comes from three major areas:

• Economics

• Psychology

• Sociology

Example

You have a friend who:

• supports you when you're stressed → reward

• spends time with you → reward

• sometimes causes arguments → cost

• requires you to spend a lot of time helping them → cost

You may mentally compare these rewards and costs to decide whether the friendship is worth maintaining.

3. General Assumptions of Social Exchange Theory

• People define situations as real

• Social facts have no inherent meaning

• People compare benefits and costs

Assumption 1: People define situations as real

Meaning:

If people believe something is real, that belief can affect their behaviour and produce real consequences.

In other words:

What people believe about a situation influences how they act.

Example:

A student believes their lecturer dislikes them.

Even if the lecturer does not actually dislike them, the student may:

• avoid asking questions

• feel uncomfortable

• stop participating

The belief creates real consequences for the student's behaviour.

Assumption 2: Social facts have no inherent meaning

Meaning:

Things in society do not automatically have meaning by themselves.

People give meaning to them.

Different people can interpret the same situation differently.

Example:

A friend doesn't reply to your message.

One person might think:

"They're busy."

Another might think:

"They're ignoring me."

The event is the same, but the meaning people give to it is different.

Assumption 3: People compare benefits and costs

This is one of the most important ideas in SET.

People mentally calculate:

Benefits − Costs = Worth of the relationship

If:

Benefits > Costs → positive relationship

Costs > Benefits → negative relationship

Example:

You have a friendship where:

Benefits:

• emotional support

• companionship

• help with studying

Costs:

• occasional arguments

• time spent helping your friend

If the benefits feel greater than the costs, you are likely to see the friendship positively.

Remember:

Rewards up, costs down = relationship becomes more attractive.

4. George Homans and Social Exchange

An exchange of tangible or intangible activities, which can be rewarding or costly, between at least two people.

Tangible = something physical/material

Examples:

• money

• goods

• physical items

Intangible = something non-physical

Examples:

• support

• friendship

• respect

• affection

• approval

Homans' Main Idea

All behaviour is a series of exchanges.

People generally try to:

• Maximise rewards

• Minimise costs

Example:

A student helps their classmate with homework.

The student may receive:

• appreciation

• friendship

• help in return

So the interaction becomes an exchange.

Equal Give-and-Take

For a relationship to be successful, Homans suggested that both sides are expected to:

Give and take in relatively equal proportions.

Example:

If Person A is always helping Person B, but Person B never helps Person A, Person A may eventually feel the relationship is unfair.

Easy way to remember:

Healthy exchange = Give ↔ Take

6. Homans vs Peter Blau

George Homans	Peter Blau
Focused on reinforcement principles	Focused more on economic/utilitarian aspects
People use past experiences to guide future behaviour	More concerned with exchange from an economic/social perspective
More psychological/individual-level focus	More economic/utilitarian focus

Homans' view

Homans believed people use their past experiences when deciding what to do next.

Example:

You compliment your friend.

Your friend reacts positively.

You receive a reward: positive response.

Next time, you may be more likely to compliment them again.

So:

Past reward → influences future behaviour

Blau's criticism

Blau believed that focusing too heavily on psychological concepts could prevent researchers from properly understanding the developing aspects of social exchange.

Simple meaning:

Blau thought we should not look at social exchange only through individual psychology.

We should also understand how social relationships and structures develop.

7. Two central ideas in SET are:

1. Self-interest

2. Interdependence

Self-interest

Self-interest means people are concerned with satisfying their own needs and getting desirable outcomes.

Homans used individualism to explain exchange processes.

He viewed self-interest as a combination of:

• Economic needs

• Psychological needs

Example:

A student joins a study group because they want:

• better grades → economic/practical interest

• friendship and support → psychological interest

Is self-interest always bad?

NO.

SET does not necessarily view self-interest as something negative.

Self-interest can guide people to create relationships that benefit both parties.

Example:

You help your friend study.

Your friend benefits because they understand the subject better.

You benefit because:

• you strengthen the friendship

• teaching helps you revise

• your friend may help you later

So both people's self-interests can be advanced.

Easy exam sentence:

Self-interest can guide interpersonal relationships toward the advancement of both parties' interests.

8. Basic Concepts of Social Exchange Theory

SET views exchange as a type of social behaviour that can produce:

• Economic outcomes

• Social outcomes

Comparing relationships to a marketplace

SET often compares human interactions to a marketplace.

In a marketplace:

• you give something

• you receive something

• you consider whether the exchange is worthwhile

SET applies a similar idea to social relationships.

Example: Buying something

You give:

RM20

You receive:

a product you value

You decide whether the product is worth RM20.

Social relationship

You give:

time, effort, support

You receive:

friendship, acceptance, companionship

You decide whether the relationship is worthwhile.

9. Social Exchange vs Economic Exchange

This distinction is very important.

Economic Exchange

Economic exchange mainly involves dealing with:

• markets

• prices

• environmental/economic conditions

Example:

You go to a shop.

You pay:

RM10

You receive:

a drink

The exchange is relatively clear and specific.

Social Exchange

Social exchange involves another person.

It usually includes:

• Trust

• No formal legal obligation

• Flexibility

• Rarely involves explicit bargaining

Example:

Your friend helps you study for an exam.

You might help them later.

There is usually no written contract saying:

"I helped you for 2 hours, therefore you owe me 2 hours."

Instead, the relationship depends on trust and mutual exchange.

10. Costs and Rewards

This is one of the core parts of Social Exchange Theory.

SET assumes:

Rewards and costs influence relationship decisions.

People consider what they receive versus what they give.

11. What are Costs?

Cost = Something negative or something you have to give up in a relationship.

The slides give examples such as:

• Time

• Money

• Effort

• Negative aspects of a partner/relationship

Example:

You spend 5 hours helping your friend prepare for an exam.

The time and effort you spend can be considered costs.

12. What are Rewards?

Reward = Something positive that you receive from a relationship.

Examples from the slides include:

• Acceptance

• Support

• Companionship

The slides also later identify rewards as:

• Cash

• Goods

• Services

• Sentiments

Example:

Your friend:

• listens to you

• supports you

• helps you when you're struggling

These can be considered rewards because they have positive value to you.

13. Worth of a Relationship

The slides give a simple formula:

Worth = Rewards − Costs

Or:

W = R − C

Example 1: Positive relationship

Rewards = 10
Costs = 4

Worth = 10 − 4 = +6

Because the result is positive:

→ Positive relationship

Example 2: Negative relationship

Rewards = 3
Costs = 8

Worth = 3 − 8 = −5

Because the result is negative:

→ Negative relationship

Remember this formula!

REWARDS − COSTS = WORTH

If:

R > C → Positive

R < C → Negative

14. Relationship Stability

According to SET:

Positive relationships:

• are expected to continue/endure

Negative relationships:

• are more likely to terminate

The stability of a relationship is connected to:

Mutual relationship satisfaction

If both people are satisfied with the exchange, the relationship is more likely to remain stable.

Example:

Person A:

• receives support

• gives support

Person B:

• receives companionship

• gives companionship

Both feel the relationship is worthwhile.

→ Relationship is more likely to continue.