Social Exchange Theory
What is Social Exchange Theory?
Social exchange theory is a behavioral framework that explains how people make decisions in relationships by weighing the potential rewards and costs of their interactions. It helps explain why individuals maintain, adjust, or end relationships based on what they perceive as fair, beneficial, or worthwhile over time. The theory is widely applied in fields such as psychology, economics, healthcare, and public policy to understand cooperation and decision-making.
The Basic Idea
Imagine you’re deciding whether to stay late at work to help a colleague meet a looming deadline. On one hand, it could strengthen your reliability and reputation in the workplace. Assisting a colleague in need would improve your professional relationship and increase the likelihood of them returning the favor. On the other hand, you might end up going home drained and missing your evening plans. Perhaps you receive no favor or recognition at all. In that moment, you are mentally calculating whether the effort is worth the return.
That internal negotiation sits at the core of social exchange theory, which proposes that people make decisions in relationships by comparing what they receive to what they give.1 Rewards might include companionship, support, praise, or influence. Costs could involve stress, obligation, time, or emotional strain. When the benefits feel greater than the effort required, people tend to remain invested. When the scale tips the other way, they may start to pull back.
Importantly, this decision-making process is personal. What seems like a small cost to one person might be overwhelming to someone else. A minor compliment may carry little weight for some but mean a great deal to others. This is also where the idea of a comparison level comes in. A comparison level is the internal benchmark we use to judge whether a relationship is good enough, and it’s shaped by our past experiences, cultural influences, and personal expectations.2
People also consider their options. If they believe that a better alternative is available, such as a different friend group, job, or partner, they may feel more inclined to leave their current situation. This is known as assessing the comparison level for alternatives.
To help understand how these patterns show up in real life, researchers often refer to several core ideas:
- People seek rewards, such as affection, validation, or shared goals
- They avoid costs, such as conflict, stress, or wasted time
- They assess relationships based on whether the rewards outweigh the costs
- They compare what they have to what they expect or believe they could have elsewhere
These evaluations are not always conscious. Still, they shape many of the decisions we make across personal, professional, and social spheres. Whether or not we notice them, these ongoing negotiations leave a lasting imprint on how we connect in friendships, romantic relationships, workplaces, and broader social settings.
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.
— George C. Homans, American Sociologist and the father of social exchange theory.5
