Social Exchange Theory

In the world of sociology (and facets of psychology), the term “Social Exchange Theory” encompasses a collection of theories oriented around the idea that our relationships are predicated on exchanges.

At the most obvious level, this might mean my relationship with the person behind the counter at a local coffee shop is based on my giving that person money, and they, in return, making me a cup of coffee.

If I don’t give that person enough money, they won’t make me a coffee, and if the coffee is not up to snuff—maybe they don’t make it right, maybe they serve it to me cold (when I ordered it hot)—I might not give them money (or may demand my money back).

If the exchange is not a balanced one, then, the relationship suffers and perhaps even ends; they might no longer serve me, telling me to go away if I insist on paying less than the sticker price of my coffee, and I might take my money elsewhere if they consistently serve me an inferior product for what I consider to be too high a price.

The claim of Social Exchange Theory is that this same dynamic plays out across all of our relationships.

When we enter a business relationship, a friendship, or a romantic relationship with another person, we exchange some type of value for some other type of value, and if the exchange becomes unbalanced, one or both people will allow it to shrivel (so that this imbalance is less impactful to them) or end (so that the person giving more than they receive no longer feels like they’re being insufficiently compensated for what they’re providing).

Research into this concept has been broad and multi-faceted, some studies assessing its impact on game theory-related outcomes, some using it to analyze generic group dynamics, and others looking into how the relative power wielded (in different spheres of life) by those involved in these relationships can influence the nature of the exchanges (and what degree of imbalance the exchangers are willing to indulge or suffer before breaking things off).

Much of the research in this space has been focused on how it applies to economic relationships, though, as understanding (and more granularly quantifying) these dynamics and their outcomes can help economists understand the behaviors of consumers within an economic system, while also allowing for speculation as how to those involved might enjoy more consistent and balanced satisfaction within an otherwise unbalanced, less-satisfying market context.

Said another way, this theory (and the fractional theories of which it consists) suggests that the way we behave toward other people is influenced by the exchange of some type of value between us and them, and how strong or weak those relationships are based on all sorts of additional variables (environmental, interpersonal, cultural, etc).

Adjusting a community’s sense of fairness or trust, then, might lead to positive or negative consequences for the relative stability or productivity of that community, just as an individual becoming more tolerant of temporary imbalances in what they give and get in their personal relationships might allow them to maintain more friendships over time (because they won’t immediately break off contact with a friend who has a bad day, month, or year), though perhaps at greater personal expense.

The core premise of this concept, though, whether we’re looking at economic outcomes or the nature of friendships and communities is that we will tend to look for relationships that give us something we want, and will tend to want as much of that value as we can get with the least cost to ourselves—whether that means paying money for something, or investing psychological energy in a specific type of friendship.

It’s also assumed that we make predictions about the outcomes of a potential relationship before we commit to it, which means we’re always subconsciously weighing the pros and cons, the costs and benefits of hanging out with someone and building a friendship, or going into business with someone, be that collaborating to start a coffee shop, or dealing with them as a customer at a cafe they’ve already built.

These assumptions can be influenced by all sorts of things, too, which may mean our past experiences and existing biases influence our tendency to commit or not commit easily, and which may mean we’re more or less prone to invest ourselves in these sorts of dynamics with folks who we suspect will take more than they give (or the opposite).