Social Exchange Theory

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4: Social Exchange Theory
Communication Context
Interpersonal, Small Group, and Organizational
Questions It Addresses in Our Every Day Lives:
1. How do we go about making decisions about what we are willing to give up in order
to gain something?
2. What factors influence our decisions to pursue, sustain, or terminate a relationship?
3. Why do we feel resentment when we believe we’ve put more into a relationship or
sacrificed more to sustain it than our partner?
Theory at a Glance
● Social behavior often involves social exchanges where people are motivated to attain
some valued reward (love, services, goods) for which they must forfeit something of
value (time, freedom, money).
● 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 when 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
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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 ninety miles 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 that follows 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 that
you’re getting more out of the exchange than you’re forfeiting. If not, one or both of you might
feel shortchanged leading to a sense of inequity.
Noted social psychologists, John Thibaut and Harold Kelley (1959), were interested in
the psychology underlying behavior in small groups—forming relationships, exerting control,
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following norms and rules, achieving goals, and playing roles. They often focused on
interpersonal relationships and dyads as they examined the impact of costs and rewards. They
developed matrices that reflected various decision outcomes (like a game) such that one choice
might lead to both members getting a moderate reward with little cost while another choice led to
the decision maker receiving significant rewards while his or her partner incurred significant
costs. Their work served as a foundation for later scholars interested in how people weigh costs
and rewards when making decisions, particularly within the context of an interpersonal
relationship. Thibaut and Kelley proposed that “for a dyadic relationship to be viable it must
provide rewards and/or economies in costs which compare favorably with those in other
competing relationships or activities available to the two individuals (p. 49).” In other words, we
choose from among relationships around us those that provide the most reward or require the
least cost.
Homans (1950, 1958, 1961) drew from a variety of theories and fields in developing his
thoughts on social exchanges (although he never used the phrase “social exchange theory” in his
early writings). For example, he drew from William Foote Whyte’s ethnographic study of
Boston’s Italian immigrants, gangs, and “corner boys” in his book, Street Corner Society (1943).
In this culture, if a person did not return a favor, he or she should not expect another favor in the
future, and this might also negatively impact the relationship. If a person did return a favor, this
would be an expression of friendship.
Homans (1958) also advocated that scholars return to what he described as the oldest of
theories of social behavior—“social behavior as exchange (p. 606).” In examining social
behavior as exchange, Homans (1961) used behaviorism to explain human behavior as
comparable to pigeons receiving rewards of corn for pecking a target (cost). Finally, he drew
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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, given the broad scope of research, there is not really any one
set of accepted concepts and propositions that can be called social exchange theory. Therefore,
our review here reflects the most common elements and propositions associated with social
exchanges 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. We will then turn our attention to how this theory has
been specifically applied to communication and personal relationships.
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Behind the Theory: Insights from George Homans’ Autobiography
While in his 70’s George Caspar Homans published, Coming to My Senses: The
Autobiography of a Sociologist (1984), in which he reflects on his long life and journey
through academia. His descriptions of his struggles and frustration with understanding the
nature of theory might be similar to your own. He noted that he heard the phrase, “‘there is
nothing more useful than a good theory,’ so often as to make me puke (p. 321).”
Early in his career Homans reflected that social scientists talked a lot about theory but
no one had actually defined it nor explained how to construct one. He read books on physics
theories, theories of economics, and the philosophy of science in order to better understand the
nature of theory and how it should apply to social sciences. He observed that a theory’s
propositions present an empirical relationship between variables rather than a logical one “as
some ignorant theorists in social science were fond of saying (p. 326).”
Homans’ commentary was often straightforward and amusing. Renowned philosopher
of science, Karl Popper once asserted that if the results of two people interacting were not what
either desired, it could not be explained psychologically. In response, Homans noted, “No
sillier fallacy—nor one more easily shown to be such—has ever, to my knowledge, been
perpetrated by an otherwise great philosopher. But then I suppose it would be boring if
intellectuals were sensible all the time (p. 341).”
ELEMENTS OF SOCIAL EXCHANGE THEORY
The components of social exchange theory are going to sound like an excerpt from a
basic economics text. However, as you’ll read the application of concepts like rewards, costs, and
profit take on some unique qualities when applied to the communication and relationships among
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people. As you read the concepts, consider the times engage in an analysis of the rewards and
costs or pros and cons of a delivering a particular message or maintaining a particular
relationship.
Value of a Reward
According to Homans (1961), “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).” Recall the
opening example. Driving a friend home was the unit of activity for which you were paid and
received a reward: lunch (the unit of activity received from another). Remember in our example
that you didn’t place much value on the initial reward, but as the reward increased in value, you
were more willing to exchange your unit of activity (drive).
While Homans drew upon economics in developing his theory, he determined that some
of the economic terms and conceptualizations did not apply as well to social behavior. Homans’
definition allows for an extensive assortment of things to be considered rewards—essentially
anything we put value on. One implication of this is that what is valuable to one person is not
valuable to another. Homans used the phrase “value of a reward” to emphasize the notion that
people might value any given reward differently. For example, a reward of five dollars might
mean more to a homeless person than to a millionaire.
The value of a reward also fluctuates over time. When you’re hungry, food has value and
can be a reward, but once you’re full, eating more is no longer rewarding—actually it has a
negative value, a cost (Have you ever had to eat two thanksgiving dinners the same day because
of split family or friend obligations? Ugh!). While young, our parents’ financial help is
rewarding, but as you become more independent and have your own income, getting money from
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your parents may not be as rewarding and might actually frustrate you, especially if it has strings
attached. To complicate this notion of rewards, while you might not find the money from your
parents as rewarding, you might still come to appreciate the love and generosity it represents,
which is rewarding to you.
Social Rewards
When rewards can only be met through interaction with another person, they are called social
rewards. For example, being loved, respected, socially accepted, attractive to others, or having
opinions and judgments approved by others, all depend upon other people. Rewards in social
interactions include pleasure, satisfaction, gratification, and fulfillment of needs (Thibaut &
Kelley, 1959). One unique property of social rewards is that we can’t really barter over most of
them (Blau, 1964). While we might say something like, “If you won’t love me, I won’t love
you,” such an attempt at barter isn’t really feasible. However, we do weigh the value of the social
rewards we receive against the costs of a given relationship.
Two people might find it rewarding to spend time together because of such intrinsic
rewards as confirmation of one’s value, respect, and acceptance. Sometimes the rewards are
more extrinsic such as helping the friend move, buying lunch, giving a gift, or 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 greater rewards for them.
You might give a friend a gift in the hopes of increasing your friend’s attraction to or affection
for you.
Costs
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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.
4-A But what about spending time with friends? What does it “cost” you to be in a
relationship? What costs are there that would be too great for you to incur and still have a
friendship? Besides the costs of a relationship, what “costs” do you incur just by carrying on a
conversation? When does a conversation cost too much and cause you to excuse yourself from
it?
Among other things, carrying on a conversation costs you time and energy—time and energy that
you might have 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 rewards vary in their value, so, too, do costs. The value of your time varies
depending upon the demands placed on it. 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
that 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.”
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Profit
Profit = Reward minus Cost. This simple economic formula was presented as applicable to social
exchanges by Homans (1961). 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 that are profitable—when 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.
Levine, Kim, and Ferrara (2010) do a good job of describing the process and effect of profits on
relationships:
“… 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 greater the cost, the greater the reward we require. 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.
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In relationships, equity is often based on partners seeking a ratio of rewards and costs
that are the same for both partners. Underlying feelings of equity is an awareness and assessment
of your partner’s rewards and costs (Cook & Yamagishi, 1983). If you feel you are putting more
effort, time, and sacrifice into a given relationship than you believe your partner is, you are likely
to feel some resentment and attempt to create more balance or equity. On the other hand, those
who are overbenefiting (getting more profit from the relationship than their partners) might be
inclined to feel guilty. Equity is an important component of relationships and has been frequently
studied. For example, one study found that inequity negatively affected marital satisfaction
(Guerrero, La Valley, & Farinelli, 2008). In this study, those who felt the most underbenefitted
felt the least satisfaction and most anger, while overbenefitted felt the most guilt. The researchers
also found more positive communication among those who felt equity. Table 4.1 shows how
individuals assess both themselves and their partners in determining equity.
Table 4.1 Sample question from a measure of relationship inequity
Think about the rewards that you and your partner receive from having a relationship with one
another. When comparing your rewards to your partner’s rewards, who is getting more
from the relationship?”
____ I get much more than my partner
____ I get more than my partner
____ I get somewhat more than my partner
____ We get the same amount
____ My partner gets somewhat more than me
____ My partner gets more than me
____ My partner gets much more than me
(from Guerrero, La Valley, & Farinelli, 2008)
Two additional factors influence our management of equity in a relationship. First, is that
the payback period is relative to the importance of the relationship and level of cost. In ongoing
relationships, our social exchanges don’t necessarily require immediate payback from our
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partners (Mitchell, Cropanzana, & Quisenberry, 2012). The amount of time we allow is affected
by the importance of the relationship and how great the cost was to us (how immediate is our
need for repayment?). If you lent a classmate five dollars you’d probably expect it paid back at
the next class meeting, but you’d probably give your best friend more time.
The second factor that affects equity is our assessment of the costs and rewards relative to
our partners’ abilities to provide them or to 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 brûlée. 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 because, as discussed earlier,
the costs are relative to the means of the parties involved. However, equity also 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
may be perceived differently by partners, which may cause anger, guilt, resentment, and even
conflicts.
4-B Imagine you and a friend were hired to paint a house for $600 and you put in twice as
many hours as your friend. How much do you think you should get of the $600? How would you
feel if your friend claims you should split the money 50/50, both getting $300? If you were upset
and didn’t think this was fair, what argument would you present to your friend?
The above Everyday Reflection illustrates a belief that fair and equitable rewards are tied to the
level of contribution or costs. Similar to equity, distributive justice involves an outcome of an
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exchange where the two parties are rewarded proportionate to their costs. In other words, the
more you invest, the greater your return (Homans, 1961). Homans argued that we seek justice
when it comes to the level of costs and rewards that are exchanged. When we believe that justice
is not being done, we get angry and try to do something about it. This 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 and
distributive justice. That is, sometimes people remain in situations even when they are
inequitable—when social exchange theory would predict that they should leave the situation.
People remain in inequitable situations for many reasons, and those reasons often 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 you contributed more than your friend?
Social Exchange
Homans believed that any social interaction between people involves costs and rewards. He
initially used the term “social behavior” for what others later 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 that time and energy can be offset
by the rewards gained such as confirmation of your value and the development of a relationship.
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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. 91).” The
rewards we receive in a social exchange can be either intrinsic (love) or extrinsic (help with
chores). At least one of the party’s is dependent on the other which is what prompts the social
exchange; that is, a person’s personal goal can only be met through interaction with another
person (Blau, 1964).
Being loved, getting help on a task for which you are unqualified, or getting a paycheck
all require social exchange. These reflect two general functions of social exchanges identified by
Blau (1964): “to establish bonds of friendship, and to establish superordination over others (p.
89).” Superordination involves having more control or power than the other person. Engaging in
ongoing social exchanges can create a pattern of trust that facilitates the development of close
relationships. When both partners meet each other’s personal goals they create a balanced,
reciprocal, interdependent relationship. However, when social exchanges create ongoing
dependence on the person providing the reward, superordination or status differences result.
Exchanges can be reciprocal or negotiated (Molm, 2003). Reciprocal exchanges occur
when people experience a cost while providing a reward for their partners without specifying the
exact nature of repayment but usually with an expectation that some form of repayment will
happen at some point. Such exchanges are voluntary and typically occur as a result of
relationships established by prior successful exchanges (Mitchell, et al., 2012). As mentioned
earlier, failure to repay the debt or favor is likely to create resentment and have a negative effect
on the relationship. Sometimes this failure to repay a debt or favor results in a discussion of the
failure. In negotiated exchanges, participants engage in a discussion and negotiation of the
exchange—giving a friend a ride, selling your used books, going on a date. However, even
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explicit social exchanges are 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 OF SOCIAL EXCHANGE THEORY
The economic model of human behavior has three applications that are of particular interest to
communication theorists. The first is at the psychological level where we use 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; remember that an exchange can be
for things that are tangible (money, products, food) and/or intangible (acceptance, love, support).
The third application of interest to communication theorists 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. You might decide to pursue a romantic relationship because exchanges with
your partner have resulted in profits, and this weighs heavily in your assessment of the pros and
cons of the relationship.
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Our primary concern in reviewing this theory is its specific applications to human
communication. 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 involves 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. New apartment roommates often engage in a discussion (sometimes it’s an on-
going discussion) of how to equitably share cleaning dishes and housecleaning. As you read the
following principles related to social exchange theory, keep in mind how these apply to
communication and your own relationships with others.
Assessing the Costs and Rewards
Principle 1: Social behavior can be explained in terms of costs, rewards, and exchanges. Richard
Emerson, another prominent figure in developing social exchange theory, 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 and the reward and
costs as a way of helping you decide?
Determining Profit
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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 take, and even who to marry.
In choosing among potential relationships, when rewards are equal, we are likely to choose the
relationship with less cost (Nye, 1978). However, you might begin a relationship with high
rewards and few costs but find that as the relationship develops the costs increase without a
proportional increase in rewards. In this situation you might try to return to the more rewarding
level or decide to end the relationship.
Managing Interdependence
Principle 3: Social interaction involves two parties, each exchanging a reward needed by the
other person. We depend upon other people for valued resources, but to gain such resources
involves an exchange of something we value. We interact with others because we gain some
reward for doing so, but the interaction must be rewarding for the others as well (Burns, 1973).
As long as we both are being rewarded, we might continue the social interaction and create an
interdependent relationship. But over time our needs are likely to change and what might be
rewarding at one point might lose its reward value later. For example, suppose a friend rewards
you for your company by fixing you cookies every time you visit. At first you might look
forward to the cookies. However, if you start gaining weight, you may no longer view them as
rewarding.
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Assessing, Comparing, and Predicting Relationship Rewards and Costs
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, these principles must be adapted to understand our behavior in interpersonal
relationships. Altman and Taylor (1973) used social exchange theory to explain the self-
disclosure in escalating relationships, and Thibaut and Kelley (1959) discussed 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: We keep tabs on the status of our current relationships by monitoring the
rewards and costs we are getting at any given moment. In essence, this assessment represents our
current outcome or profit. Consider one of your present relationships. How much reward are you
getting from that relationship today and how much is it costing you? Our outcomes are compared
to the other assessments and affects our satisfaction and relational decisions.
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. For example,
we compare our expectations for the amount of reward and cost in marriage with what we
actually experience. If marriage falls short of our reward comparison or exceeds our cost
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comparison we are likely to be unhappy. We are likely to continue relationships that exceed our
expectations and less likely to continue those that fall short.
4-C Think about your relationships where the profits exceed what you believe you
deserve/expect. How did you feel? How long did you stay in the relationship? Now think about
those relationships that you have or have had that fall short. How did you feel? How long did
you stay in the relationship? Overall, how well does this principle apply to your experiences?
Comparison Level of Alternatives: We compare 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 current relationship for the alternative. Such a change often occurs as you shift from
high school friendships to college friendships. The shared activities and common interests you
develop with college friends often provide more rewards than your high school friends who you
see infrequently.
Forecasted Rewards and Costs: We assess the future of our relationships, evaluating the
potential rewards and costs. Thibaut and Kelley saw this as particularly applicable in the
beginning of a relationship and as a factor in the stability of a relationship. If we are happy with
the profits of a given relationship and forecast that they will 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.
Cumulative Rewards and Costs: The cumulative rewards and costs assessment
represents the sum total of the rewards and costs (profits) a person receives over the history of
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the relationship (Altman & Taylor, 1973). We tend to remain in relationships 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 Kim (2010), the level of investment in a college romantic
relationship was positively related to stability in the relationship after a betrayal.
The combination of these assessments leads to predictions about the satisfaction and
stability of a given relationship. The most stable and satisfying relationship would be one where
the forecasted profits and current outcomes exceed the comparison level of our expectations and
alternatives. The most unstable and least satisfying would be one where an alternative appears to
exceed your comparison level (your expectations for a relationship), which, in turn, exceeds the
current outcomes and forecasted profits of your current relationship, and in which the cumulative
costs exceed the cumulative rewards of that relationship. Here’s how that looks: Alternative >
Comparison Level > Current Outcomes & Forecasted Rewards & Costs + Cumulative Costs >
Cumulative Rewards. You’d probably leave your current relationship and pursue the alternative
in a flash.
Applying Theory to Research—TV viewing effect on perceived relational costs and
rewards.
Where do you get your expectations about romantic relationships and marriage? Besides your
personal experiences and observations of such relationships around you, the manner in which
such relationships are portrayed on TV or in the movies might also contribute. In a recent study
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(Osborn, 2012), married couples responded to an online survey regarding their assessment of
the costs and rewards of their relationship, their expected costs and rewards, quality of
alternatives, satisfaction, and commitment. In addition, they indicated the number of hours the
averaged a month watching romantically themed shows (such as soap operas, dating shows,
young adult dramas, relationship reality shows, and romantic movies). Their average was 8.85
hours a week. Finally, participants indicated the degree to which they believed the TV
portrayals reflected reality.
Correlations indicated the more romantically themed programs people viewed the
greater relational the costs, the greater expected costs, and the greater the quality of potential
alternative partners. But no relationship was found with rewards or expected rewards. Further
analysis found that rather than how much a person watched romantically themed shows, it was
the belief in the portrayals was actually influential. The stronger the belief in the portrayals the
greater the expected costs, the greater the costs in their relationship, the less commitment, and
the higher the perceived quality of alternatives.
While the relationships were neither cause and effect, nor particularly large, the study
does show that media and technology can affect our perceptions of the costs and rewards
associated with our relationships. What other ways can you identify that your exposure to
media and technology might affect decisions you make relative to social exchange theory?
Social Exchange Theory and Members of Groups and Organizations
Principle 5: Social exchanges affect the relationships among members of groups and
organizations. The early work by Homans focused on the relationships of group members and on
such issues as influence and conformity. Blau (1964) discussed how the need for advice or help
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leads to exchanges among members in groups and organizations. The person providing
assistance (cost) is rewarded with respect, esteem, or some reciprocal action from the advisee.
Repeated advising interactions can be the foundation of a relationship even when assistance is no
longer needed. For the relationship to continue, an equitable exchange of rewards is required.
4-D Think about a new job where someone trained you. You received information and in
exchange probably displayed respect for your trainer. Did your relationship continue after the
training period was over? If so, what was the nature of your relationship? Your relationship
might have continued if you were both content with the succeeding social rewards. Did that
happen for you?
Cropanzano and Mitchell (2005) distinguish between economic and social relationships
and economic and social exchanges. In their model 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 a cashier at McDonalds while you are buying your
hamburger represents the economic relationship with a social exchange.
SOCIAL EXCHANGE THEORY EVOLUTION, AMMENDMENT, AND CRITICISM
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, while 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 and how this theory has evolved, been amended, and critiqued.
Evolution and Amendment
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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 control and
manage that other person by giving out 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. Blau (1964) noted that power
could also be used to punish or withhold some reward until an action is taken (the infliction of
costs).
A significant amount of work on social exchange theory occurs within sociology, so it is
understandable that the focus has been on power’s effect in the development of social networks
and social structure and in how power 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 an unequal distribution of rewards—your boss is usually paid
more than you, and you may be paid more than a less experienced new hire. 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) noted 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 tree is sometimes referred to as exchange network theory.
Criticism
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Some of the criticisms of social exchange theory are tied to the original propositions and
assumptions made by Homans. These criticisms led to changes in social exchange theory that
include the way rewards and costs are conceptualized. 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 do you assess the rewards and costs, determine the profit,
project the future, and compare it to alternatives? While you may do it occasionally, you are not
likely to be in a state of constant accounting. For example, can you really calculate the size of the
savings account that your best friend 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 operant conditioning principles (based on observations of how
pigeons react to reinforcements) than on calculated decision making and rationality.
As previously discussed, people vary in the reward values they place on things. This
variability makes it difficult to actually assess reward values—ten dollars doesn’t hold the same
value for everyone. Measuring values and being able to conduct research to corroborate the
theory is problematic since what is of value to one person might not have the same value for
another. Reward values are open to interpretation. In addition, some rewards exist only in
symbolic or intangible forms, adding to the challenge of measuring them. Your best friend bakes
your favorite cookies and gives them to you. The actual cost and time involved in the cookies is
of less reward value than the symbolic reward you take from your friend’s gesture.
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4- E What examples of such symbolic rewards can you recall having received recently? Which
symbolic rewards do you value the most? The least? What makes a symbolic reward valuable to
you?
The principles of social exchange don’t necessarily apply to all exchanges because of
restrictions created by roles and social structure. Some exchanges occur without any real option
of negotiating the costs and rewards. When you buy a hamburger at Wendy’s for $4.99, you don’t
suggest that the price is too high and offer them $4.00 for the burger (though this would be an
interesting interaction to try a few times). Of course, social exchange might occur at the
cognitive level such that you decide whether the cost of the hamburger is worth the reward (the
actual burger). Such exchanges occur because they are defined by the roles and social structure
in which we find ourselves. Think about how many of your interactions and activities with other
people are not social exchanges in the sense of assessing costs and rewards. You go to your
classes, take notes, write papers, and take exams because that is the role you are playing as a
student. When we teach our classes we don’t think about how much we’re being paid to be there
(except on a particularly bad day!), we just do it because it is the role we have accepted.
A final criticism levied against social exchange theory is its oversimplification of human
exchanges; that is, that the theory is reductionist (reducing something to very few factors). To
explain human interactions only in terms of costs, rewards, profits, and exchanges leaves out
many other factors. However, since its initial introduction, the theory has become more complex
as other concepts were added such as social structure, power, trust, motives,
environment/context, relationship, and time have become part of various models of social
exchange theory. These elaborations of social exchange theory significantly reduces the claim of
the theory being reductionist.
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Because of such simplification and concerns about the theories application to changing
social values and structure, the theory is considered weak in its ability to meet the theoretic goal
of prediction. Nonetheless, noted social psychologist, Kenneth Gergen (1980) concluded that
despite its predictive weaknesses, the theory has many other values that continue to apply across
time such as its explanatory power that helps us make sense of social interactions, its ability to
sensitize us to the exchange aspects of our interactions, and its value in providing a way to
organize our haphazard social lives.
RELATED THEORIES
The three theories included here all take a particular aspect of social exchange theory and
develop it with greater depth. Each builds upon the fundamental concepts of rewards, costs and
social exchanges but pursue a stronger examination of the impact on relationships. Rather than
being offered as alternatives to social exchange theory or to each other, think about how all of
these theories can be integrated to provide a more valid theory that applies to human
communication.
Equity Theory (or Theory of Inequity)
While equity theory derives from a variety of sources such as Homan’s distributive justice, it is
generally linked to J. Stacy Adams (1963, 1965, 1968) who focused on the factors that create a
sense of injustice and what happens when people feel outcomes are unjust. While he used
employer-employee exchanges as his primary discussion example, Adams contends issues of
inequity exist wherever there is a social exchange such as between students and teachers, parents
and children, or between lovers.
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The focus of equity theory is an examination of how feelings of equity or inequity affect
a person’s motivation, such as a willingness to do a job. Adams (1963) defined and examined
inequity in terms of people’s feelings about how their costs (amount of work, etc.) and rewards
(pay, perks, etc.) compared to other people doing similar work. You may have experienced this in
class projects if you have ever felt you were putting in more work than another team member
who would get the same reward as you—the grade for the project. Equity theory has investigated
how we respond to inequity and our efforts to achieve equity or to reduce inequity. Inequity may
produce tension and distress that people seek to remove (Adams & Freedman, 1976). For
example, in your team project, you might decide to put in less effort to match the other member,
or perhaps you might try to increase the cost in some way for the other member (have him or her
pay for all the materials and pizzas you eat at meetings). The complexity of the human cognition
and behavior related to equity theory has resulted in hundreds of research articles.
Interdependence Theory
John Thibaut and Harold Kelley (1959, 1978) initially focused on the ways that two or more
individuals are dependent upon one another for “achieving favorable outcomes (p. 4).”
Underlying interdependency is the ability of a person to affect or control another person’s
outcomes. Interdependency theory has interesting applications, for example, explaining the
formation of coalitions in groups. In a triad, one member might discover more interdependency
with one but not both of the other members, and vice versa.
Suppose you’re in a work group with two other people and that you and one member
seem to be particular complementary; you each provide resources needed by the other. However,
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the third member doesn’t have any such resources to provide. The interdependence you have
with one member results in a coalition for the two of you, and the third person is isolated.
Interdependency theory examines how structures and relationships interact to produce
coalitions that help partners maximize their outcomes. The theory addresses the interaction
among three requirements often found in group and organizational contexts: what is required of
you, what is required of the other members, and what is jointly required (the nature of the task
related to division of labor and structural factors imposed by the organization and context)
(Victor & Blackburn, 1987). Victor and Blackburn (1987) explained how these relate to
interdependence and introduce the notion of fate control:
“The three requirements give interdependent units a specified degree of absolute and/or
contingent control over their own and each other's performance. To the extent that Unit A
requires an action by Unit B (e.g., delivery of materials, completion of a task), B can
affect A's operations by either performing the required action or not. In this situation of
simple exchange, interdependence theory asserts that B has fate control (FC) over A (p.
488).”
Social psychologist, Caryl Rusbult (1980, 1983) applied interdependence theory to her
examination of satisfaction and commitment in relationships in developing her investment
model. In her model she considered the effects of rewards, costs, commitment, investment, and
available alternative partners on satisfaction. She found increasing rewards positively related to
increases in satisfaction but that variations in costs did not. People stayed in dissatisfying
relationships because of their level of investment or a lack of alternatives. And, the more
investment, rewards, and lack of alternatives, the more committed a person would be to the
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relationship. Rusbult’s investment model was seen as applicable to romantic relationships,
friendships, and even the workplace.
Resource Theory
According to social exchange theory, an exchange reduces the amount of a resource someone
has, but some resources—a smile, love, a pat on the back—can’t be used up. Foa developed
resource theory to resolve this conundrum (Foa, 1971; Foa & Foa, 1974, 1980). Foa (1971)
proposed that resources varied along two dimensions: concreteness-symbolism and particularism
(interpersonal)-universalism. Concrete resources are the tangible goods or services that might be
exchanged, while symbolic resources include valued words and actions. Foa recognized that the
source of a resource affects the resource’s value, so the notion of particularism represents the
degree to which a resource has value because of the particular person or relationship (a spouse
saying “I love you”), while universalism represents resources that have value regardless of the
relationship (e.g. money). Within these two dimensions, Foa plotted six interpersonal resources:
information, money, goods, services, love, and status as seen in Figure 4.1. Foa (1971) originally
contended that those resources that are nearest each other are perceived
Figure 4.1: Dimensional Model of Interpersonal Resource Types
Particular Love
Status Services
Information Goods
Money
Universal
Concrete Symbolic
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as most similar and also most substitutable, but the research to confirm this has been mixed (Foa,
Törnblom, Foa, & Converse, 1993). Needs are an important part of considering how the
resources are exchanged. A person in need of money might exchange goods, information, or
services, for money. Two people in need of money are unlikely to make an exchange, while two
people in need of love might very well considerate it.
APPLYING SOCIAL EXCHANGE THEORY TO EVERY DAY COMMUNICATION
We hope this chapter has prompted you to consider the degree to which you personally examine
the rewards and costs of your exchanges with friends, family members, romantic partners, and
workplace relationships. In so doing, perhaps you discovered that while you sometimes take into
consideration the outcomes or “profits,” you also engage in social interactions without your
accounting ledger. But are the decisions you make without considering the rewards and costs as
successful or satisfying? One of the challenges of keeping track of rewards and costs is actually
identifying them. Knowing how much money you have spent is fairly straightforward, but how
do you keep track of the costs and rewards of a given relationship? How do you assess the value
of your cost such as time in comparison to the reward of simply spending time with a particular
person who gets on your nerves occasionally? Awareness of social exchange theory might also
help you to better understand frustrations in your personal and workplace relationships where
you experience inequities.
CHAPTER SUMMARY
Elements of Social Exchange Theory
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•Social exchange theory describes the elements and process by which people engage in
an exchange where rewards are sought and costs are incurred.
•George Homans used the phrase “value of a reward” to emphasize that people value
rewards differently; the value of a reward fluctuates over time.
•Rewards in social interactions include pleasure, satisfaction, gratification, and
fulfillment of needs; we can’t really barter over most of them.
•Homans defined costs as something of value that is given up, but it can also be the
withdrawal of a reward, or punishment; the value of costs also varies over time.
•Profit = Reward minus Cost. Profits affect our decisions regarding our
communication and relationships; we seek interactions that are profitable (when we
feel greater reward than cost).
•While gaining a profit is desirable, we often find ourselves dealing with simply
achieving a fair or equitable trade.
•Engaging in ongoing social exchanges can create a pattern of trust that facilitates the
development of close relationships, but when social exchanges create ongoing
dependence on the person providing the reward, superordination or status differences
result.
Guiding Principles of Social Exchange Theory
•While many principles have been developed as part of social exchange theory, five
have the greatest application to communication.
oPrinciple 1: Social behavior can be explained in terms of costs, rewards, and
exchanges.
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oPrinciple 2: People seek to maximize rewards and minimize costs in pursuit of
the greatest profit.
oPrinciple 3: Social interaction involves two parties, each exchanging a
reward needed by the other person.
oPrinciple 4: Social exchange theory can be used to explain the development
and management of interpersonal relationships.
oPrinciple 5: Social exchanges affect the relationships among members of
groups and organizations.
Social Exchange Theory Evolution, Amendment, and Criticism
•As social exchange theory developed it was applied in a variety of ways such as
explaining social power and control, social networks, and social structures.
•Criticisms of social exchange theory include:
oPeople do not always consciously act in such a rational and analytic manner.
oDifferent people place different values on the same rewards.
oExchanges are at times dictated by social structure rather than by the
individuals themselves.
oThe overall theory tends to oversimplify human interactions and behavior.
Related Theories
•Equity theory focuses on issues of inequity and how people respond to and manage those
situations in which they feel their costs are greater than the rewards, or when they feel
they are not getting their fair share of rewards.
•Interdependence theory deals with those situations where a given structure or task leads
individuals to form coalitions in order to best maximize their outcomes. Such
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interdependence is reflected in the investment model of relationships in which costs,
rewards, commitment, investment, and alternative partners interact and affect relational
satisfaction.
•Resource theory details the nature of rewards and costs by using the dimensions of
particularism-universalism and concreteness-symbolism to classify six specific
interpersonal resources (love, status, services, goods, money, and information).
Applying Social Exchange Theory to Every Day Communication
•While you may sometimes take into consideration the outcomes or “profits” of social
interactions, you also likely engage in social interactions without your accounting ledger.
•One of the challenges of keeping track of rewards and costs is actually identifying them.
•Social exchange theory can help you assess the value of your costs in comparison to the
rewards; it may also help you better understand frustrations when you experience
inequities in your personal and workplace relationships.
FOR REVIEW
Key Terms
Rewards Value of a Reward
Social Rewards Costs
Profit Equity/Distributive Justice
Social Exchange Outcomes
Comparison Level Comparison Level for Alternatives
Forecasted Rewards and Costs Equity Theory
Interdependence Theory Resource Theory
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Questions for Review
1. What is meant by “value of a reward”?
2. What are some of the costs that someone might incur in an interpersonal relationship?
3. What is profit?
4. Under what conditions are people likely to feel inequity?
5. Briefly explain what a social exchange entails.
6. What are the principles associated with social exchange theory?
7. As social exchange theory was expanded, in what other ways was it applied?
8. What is one of the criticisms raised about social exchange theory? Do you think this criticism
is valid? Why or why not?
9. How do interdependence theory and resource theory relate to each other?
CLASSROOM ACTIVITIES
1. Think about all the decisions you’ve made in the last twenty-four hours that involved some
other person—texting someone you’ve recently met, taking a friend to dinner, going for a jog
with a friend, calling your mom, etc. Identify at least four such decisions. For each decision,
consider what the costs were—what did you have to sacrifice (time, freedom, money, etc.). What
rewards did you ultimately gain (information, a boost to your self-esteem, weight loss, etc.)?
How profitable do you feel each of your decisions was? Will the level of profit or loss affect
future decisions regarding the same person? Why or why not?
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2. In small groups, generate a list of examples where you felt inequity in a relationship or
interaction. Once you have a list of eight to ten examples, regroup them into three or four
categories according to qualities they share in common—workplace, romantic relationship, etc.
Discuss the impact that the inequity had on you and the other person (people) involved. For
which category did inequity have the most negative impact? Why? For which category did
inequity have the least impact? Why? Discuss your conclusions with the rest of the class.
3. In groups of three to five, analyze your current jobs or most recent jobs using social exchange
theory, equity theory, interdependence theory, and resource theory. Help the people in your group
apply the theories to the analyses. Consider how you felt in the job relative to the resources you
received and the costs you incurred. For jobs that you no longer hold, to what degree did inequity
affect the decision to quit? As a group, decide which theory provides the best explanation for the
workplace exchanges and interactions.
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