What is Social Exchange Theory and Explanation

It is proposed by the social exchange theory that social behavior is the result of an exchange process. The basic purpose of exchange theory is to maximize benefits and minimize costs. In sociology, social exchange theory is a very major theoretical perspective

social exchange theory explanation

Social exchange theory is a two-sided process involving two actions – one is to give and the other is to get something in return. Many psychologists consider the social exchange theory as highly individualistic. According to this theory the individual measures all social interactions against personal gains that he achieves. All individual decisions and actions are based on self-serving motivation.

The basic formula for predicting behavior:

Behaviour(profit) = reward of interaction – cost of interaction.


Sociologist George Homans (1961) and Peter Blau were the first to find out the theory of social exchange theory in the late 1950s and early 1960s.


George Homans in 1958, created the social exchange theory. There are basically two main fundamental properties – the one is self-interest and the other is interdependence. Whenever there occurs an exchange between two parties, then an individual is looking out for their own economic and psychological needs or benefits. They want to satisfy themselves that their needs are being fulfilled. And when there is any social exchange, then there is some sort of interdependence on one another. Two parties are mutually dependent on one another for any kind of social exchange. If this dependence provides a positive outcome then the relationship will be held in good terms and will be continued and if in case the outcome is negative, the two parties won’t work together.


Blau’s work was very much influenced by that of Homans. His focus was merely future-oriented. He was the one to motivate theorists to look forward. He thought if people will think too much about the returns that they will be getting as a reward then they won’t be able to learn the developing aspects of the social exchange.


Social exchange theory basically explains the behavior of people while exchanging something. It is the study of human behavior according to the situations. There are various basic concepts of this theory are as follows:

  1. Costs: Costs can be anything whether time, effort or money.

2.Rewards: It can be anything whether the sense of acceptance, support, and companionship.Simple social exchange models assume that rewards and costs drive relationship decisions.

  1. Resources: Resources are any commodities, material or symbolic, that can be transmitted through interpersonal behavior and give one person the capacity to reward another.



1. It is a scientific theory. It explains that individuals minimize their costs and maximizes their rewards within a           relationship.

  1. It tells one how to sustain and keep relationships.
  2. It is a timely and systematic approach. The theory is almost applicable in all situations.
  3. It helps us to understand that when we give something in any relationship then we expect something in return to maintain the relationship.
  4. The theory is fairly simple, allowing most people to understand its general assumptions and relate to them.
  5. When a person becomes knowledgeable of this theory, he or she can work towards having more balanced relationships. This knowledge can also provide awareness of what one’s own costs are to other people.


  1. The whole theory revolves around the rewards only and it neglects the cultural contexts and variations of cultures.
  2. Social exchange theory makes people seem individualistic and reward-seeking people.
Share on: