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EXCHANGE THEORY

Sociologyindex, Sociology Books 2012, Rational Choice Theory, Structuralism, Exchange Theory

Exchange theory is a theory associated with the work of George Homans and Peter Blau and built on the assumption that all human relationships can be understood in terms of an exchange of roughly equivalent values. Social exchange theory is linked to rational choice theory and structuralism, and features many of their main assumptions.

Homans’s article entitled “Social Behavior as Exchange” is viewed as the most important work on social exchange theory. "Social behavior is an exchange of goods, material goods but also non-material ones, such as the symbols of approval or prestige. Persons that give much to others try to get much from them, and persons that get much from others are under pressure to give much to them. This process of influence tends to work out at equilibrium to a balance in the exchanges. For a person in an exchange, what he gives may be a cost to him, just as what he gets may be a reward, and his behavior changes less as the difference of the two, profit, tends to a maximum."

George Caspar Homans, Richard Emerson, Peter M. Blau, Peter Ekeh, and Karen Cook are credited with the consolidation of the foundations of Social Exchange Theory..

According to social exchange theory all human relationships are formed by the use of a subjective cost-benefit analysis and the comparison of alternatives.

Again social exchange theory posits that these exchanges are seldom monetary, rather they are frequently intangibles like intimacy, status, connections.

Social Exchange Theory as a Conceptual Framework for Teaching the Sociological Perspective. - O'Brien, Jodi A.; Kollock, Peter - Teaching Sociology, v19 n2 Apr 1991
Abstract: Uses social exchange theory as a conceptual framework for developing the sociological imagination. Explains this counters a trend toward an emphasis on social forces as behavioral determinants and the omission of values in the classroom. States exchange theory emphasizes how individual action collectively changes the social structure. Applies theory to personal relationships, power, institutions, and social dilemmas.

BRINGING EMOTIONS INTO SOCIAL EXCHANGE THEORY
Edward J. Lawler, School of Industrial and Labor Relations, and Department of Sociology, Cornell University, Ithaca, New York 14853; e-mail: ejl3@cornell.edu
Shane R. Thye, Department of Sociology, University of South Carolina, Columbia, South Carolina 29208; e-mail: srthye00@garnet.cla.sc.edu
Annual Review of Sociology Vol. 25: 217-244 (Volume publication date August 1999)
Abstract We analyze and review how research on emotion and emotional phenomena can elaborate and improve contemporary social exchange theory. After identifying six approaches from the psychology and sociology of emotion, we illustrate how these ideas bear on the context, process, and outcome of exchange in networks and groups. The paper reviews the current state of the field, develops testable hypotheses for empirical study, and provides specific suggestions for developing links between theories of emotion and theories of exchange.

Some Amendments to Social Exchange Theory: A Sociological Perspective
Milan Zafirovski, Department of Sociology, University of North Texas, zafirovM@scs.cmm.unt.edu
Theory & Science (2003) ISSN: 1527-5558
Abstract: The exchange paradigm entertains high aspirations concerning its place within social psychology and generally sociology and psychology. This is epitomized, for example, by its fundamental premise that all social life can be treated as an exchange of rewards or resources between actors. Such nature of social life is often the rationale for the claim that the social exchange paradigm features equivalent generality and relevance for sociological theory. This claim is reexamined in this paper, by putting emphasis on rational choice and behaviorist versions of social exchange theory. The examination does not provide prima facie support for the claims of social exchange theory, especially its economic-behavioral formulations. Instead, premised on sociological social psychology or psycho-sociology an alternative conception of social exchange is formulated and empirically estimated as a viable alternative to the current theory. The paper attempts to make a contribution toward the integration of sociological and social-psychological theory. The main conclusion is that actors in exchange can be not only individuals but also groups, and that in-group processes and intergroup relations are more complex than being sets of market transactions.
Extracts: Introduction
In contemporary sociology, notably sociological social psychology (Stolte, Fine, and Cook 2001), one of the most prominent and ambitious (Alexander, 1990; Cook, 2000) theoretical conceptions is probably exchange theory. In retrospect, social exchange theory has been introduced to sociology by psychologically (Emerson 1962; Homans 1961) and economically (Blau, 1964) minded sociologists, as well as in psychology by social psychologists (Thibaut and Kelley, 1959) and partly in cultural anthropology by economic anthropologists (e.g. Goodfellow, 1939). The key tenet of social exchange theory is that human behavior is in essence an exchange (Homans, 1961: 12-3), particularly of rewards (Homans, 1961: 317) or resources of primarily material character (wealth) (Cook, 2000; Stolte et al., 2001) and secondarily of symbolic attributes. Presumably, such exchange transactions permeate all social phenomena (Coleman, 1990: 37), including group processes and intergroup relations, which are conceived as sets or joint outcomes of voluntary individual actions induced by rewards (Blau, 1964: 91). In this view, exchange transactions constitute the foundation and open secret (Homans, 1961: 317) of social life, of group processes and relations particularly.
Exchange theorists have elaborated and summarized the above argument as follows. Arguably, social action is an exchange of (tangible or intangible) activities and rewards/costs between individuals on the grounds that people have always explained their conduct by means of its benefits and costs to them (Homans, 1961: 12-3). Exchange represents the basis of human behavior (Homans, 1961: 317) and is pervasive throughout social life (Coleman, 1990: 37-39). As regards the character of social exchange in relation to economic transactions, the former is constituted by activities of purposive actors in the case of a “configuration of interests and resources”, and the latter (a market institution) by interdependent exchange transactions (Coleman, 1986). Assuming that exchange transactions are reciprocal, if reciprocity is not observed such transactions will tend to eventually discontinue. In psychological terms, an exchange is therefore defined as social interaction that is characterized by reciprocal stimuli or mutual reinforcements. Namely, exchange relations are “by definition reciprocal, and if this reciprocity is broken the relationship will extinguish over time. Within the attribute of reciprocal reinforcement, the concept of an exchange relation contains an ’exchange ratio’ [balance-imbalance]. This variable sets the stage for introducing dependence, power, and cohesion” (Emerson, 1969: 387-389).
The task of social exchange theory is then to investigate the reciprocal (mainly material) advantages that individuals draw from their exchange transactions on the premise that they engage in and sustain most social, including noneconomic, relations in the rational expectations of such advantages independently of normative or group considerations. In short, exchange theory in sociology studies the “mutual gratifications persons provide one another that sustain social relations. The basic assumption is that persons establish social associations because they expect them to be rewarding. This implies that the exchange of rewards is a starting mechanism of social relations that is not contingent on norms prescribing obligations” (Blau, 1994: 152-156). In particular, exchange theory provides sociology with a “clear conception of the material and resource basis of social action” (Cook, 2000: 688) and thus is “well-suited for grasping material/extrinsic exchange” (Stolte et al., 2001: 411). Hence, the exchange approach in sociology is described as the “economic analysis of noneconomic social situations” (Emerson, 1976: 336).
Conclusion
The preceding discussion suggests that exchange and related concepts borrowed from orthodox economics--viz., non-economic (marriage, political, religious, intellectual) markets, social capital, psychic income, profit, cost-benefit, investments--are metaphors or analogies at best. Yet, in its rational choice (and behavioral) rendition, “social exchange” becomes an empty concept or pseudo-mathematic trick emptied of any substantive content (Margolis, 1982: 16), just as an overarching mono-utility function (Etzioni, 1999) or cost-benefit model (Elster, 1998) spuriously homogenizes diverse human goals, preferences and affects16 into a single measure or unit (“utility”) that is content-empty.
Hence, at the heart of the problematic character of social exchange theory is that their advocates “do not always theorize exchange [but] rather than explaining markets and exchange, they employ markets or exchange to explain social and economic life” (Lie, 1997: 343). The conceptual derivative of such theorizing is human society cum an all-embracing marketplace inhabited by actors engaged in consistent optimization of utility-disutility (rational choice) or reward-punishment (behaviorism), thus propelled by “inborn” economic-hedonistic propensities to exchange and to seeking pleasure and avoiding pain. Admittedly, social exchange theory is deliberately and essentially a market-economic framework for approaching noneconomic phenomena by suggesting, for instance, that group pressure and member conformity are to be regarded as “two sides of a transaction involving the exchange of utility or reward” (Emerson, 1976; 336). In general, the theory “adopts the basic behavioral assumptions of operant psychology and utility theory in economics regarding utility maximization, rationality, learning and deprivation-satiation” (Baron and Hannan, 1994: 1133). In particular, the rational choice model provides the “basis” (Cook, 2000: 687) for much of modern social exchange theory (for a review cf. Stolte et al., 2001).
Such an economistic-behaviorist conceptualization of social action and society suggests that omni-potent (in terms of scope) market concepts, such as exchange or rational (including public) choice, do not represent always theories of the market. This holds good to the extent that these theories do not always theorize the latter, but tend to apply market laws and reasoning to all social domains (Lie, 1997: 343-345), thus trying to create assort of imperial Benthamite social science (Lewin, 1996: 1299). A theory of markets performs description and explanation of the character and operation of market variables, processes and structures like prices, demand, supply, exchange, competition, monopoly, etc. in their economic and societal framework rather than construing non-market categories as “markets”, human interaction as “exchange” of rewards or economic competition, as does social exchange (and other rational choice) theory. On this account, much of current social exchange theory, especially its rational-choice formulation, appears as a questionable interpretation and expansion of the orthodox model of economic exchange, especially what neoclassical economists like Edgeworth call catallactics understood as the theory of a “perfect market.”

Reference Bibliography:

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Homans, George (1971) Bringing Men Back In. Pp. 109-127 in Institutions And Social Exchange. Turk Herman and Richard Simpson (Eds.). Indianapolis: Bobbs-Merril.

Lawler, Edward (2001). An Affect Theory of Social Exchange. American Journal of Sociology 107: 321-352.

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