The Theory of Social Exchange, put simply, says that social relations are based on exchanges of value.
However, don’t close the page just yet: the definition is only the tip of the iceberg and the theory of social exchange is crucial to social power, to becoming a high-value individual, to social power and, generally, to success.
The theory of social exchange also has a lot of corollaries which can better help you understand human relationships and, most of all, improve your social skills.
The Social Exchange Theory has roots in sociology, psychology and economics. The three major corollaries are that:
- To get what you want you have to give others what they want
- The most popular people will be those with the most to give
- Strong and long lasting relationships reach a give and take balance
The social exchange theory is one of the fundamentals of social relations.
- Social Currencies Layers: What People Want
- High Value People: Who are They & What They Want
- Value Takers: Who Are They?
- Social Exchange Market: Bring to Get
Social Currencies Layers: What People Want
There can be hundred of thousands of social currencies that people can exchange depending on the level of details we want to group them in.
But I find the most insightful grouping to be that of the visibility levels, which we will call layers.
The qualities people usually first notice in you
- Physical fitness
- Body language / Nonverbal cues
- Walk and moves
Not necessary to exchange information but can be uncovered observing you environment
- Money / Resources
- People around you (the cooler your group the cooler you’ll be perceived)
- Social Proof (people respect you)
- Upbeat, positive personality (make people around you smile)
- Position in society / venue (owner, professor at uni etc.)
To access the deeper layer people need to get to know you
- Great personality
- Makes you feel good when interacting
- Riveting conversations
- Life experiences
- Life achievements
- Mastery (of something)
- Future potential (to acquire any of the above)
Social Currencies: Visibility
I divided the above fundamental qualities in terms of visibility because it’s a key distinction to understand how the layers of social currencies affect social exchanges:
External Layers Are Marketing
In some situations external layers are all that is needed. Some people won’t need deeper qualities and the gloss of the external shell will immediately make you a high value giver for them. This is why beautiful people sometimes need to fight the idea that they only achieved success because of their external qualities.
People high in external value tend to resent the people who only want them for their external qualities because most of us want to be appreciated for our deeper layers.
Example: dating is an obvious one, especially if you’re a woman.
Locations such as noisy clubs also heighten the importance of external layers as it becomes harder to access them.
External Layers are Pass Through for Deeper Ones
Some people might require deeper values to enter in any meaningful interaction or relationship with them. But they will not be interested in getting to know your deeper qualities if you don’t reach at least a minimum threshold of external qualities. External qualities are then what will get your foot in the door. Have great external qualities and more and more people will be interested in your deeper layers.
Example: how willing are you to go for a beer with a smelly, hunchback homeless in tattered clothes? That homeless is the extreme example of someone with highly negative social external currency: just by being together he takes social value from you (note: a few people can transcend that but we’re talking 0.1% here).
Deeper Layers Make Deeper Bonds
Deeper layers tend to make for deeper and more long lasting relationships.
Importantly, all layers always influence each other all the times, and more than most people would think or realize.
Example: Beautiful people are perceived as smarter, people in authority positions are perceived as taller (Winning Body Language), and great personalities who make us feel good are perceived as more attractive.
Currency Marketability: What People Want Most
A Mastercard with a million USD in the bank lets you buy anything anywhere. A million cash also gives you good options. The equivalent value in Ukrainian Hryvnia gets complicated: few people are interested in that currency. A million USD worth in, say, Palladium, is even more impractical: how are you going to convert it?
Notice all currencies have the same nominal value, they all take the same effort to acquire, but they heavily differ on how readily accepted they are.
Social currencies are similar, and it’s also connected to layers.
The external layers tend to be appreciated by most everyone, most everywhere and tend to be more uniformly appreciated. Deeper levels are more useful for deeper and long lasting mutually beneficial relationships, but can be more situational and people specific.
Life experiences in travels for example make your insight and stories hot currency to people who love travels and adventures or dream of something similar one day.
But people who are not interested in ever leaving their city? Not so much. There it can actually highlight how the two of you have little in common.
Deeper Layer Marketability:
there are many deeper layers though that tend to be highly marketable currencies. Conversation skills and social skills for example are very attractive social currencies for everyone.
On the other end of the spectrum, if you invest most of your time developing a vast knowledge of, say, entomology and you become a research professor in that field that will not make you very interesting outside your classrooms -entomology is the study of insects-.
So you already see the first corollary of getting what you want with the social exchange theory: develop currency that most people want.
The Currency of Mastery: the Broad Appeal
However, being really good at something, anything, will likely make you more interesting across the board, even to people who are not particularly interested in your area of specialization -including entomology possibly, yes :D-.
You’re a developer? Boring to most anyone. But if you’re a wiz of coding, popular hacker and pioneering a whole new language, now that’s interesting.
It’s because high level of achievements say great things about you. For example, it says that you got grit and determination, that you can focus, and that you likely found your passion. In a world of undecided people who don’t know what they want that makes you stand out.
And of course, standing above the mediocre masses is often an attractive quality by itself.
Currency Value: a Situational Overview
There’s also a situational element in the value we possess.
A professor can be an idiot most people don’t wanna speak with, but when he steps in his classroom many students crave his approval.
Or you can be an idiot, but if you bring a date to a club where you skip the line, get served quicker and everyone says hi to you, you look like you have loads of social value and being with you in that environment.
That being said, it’s not all relative and the ability to create positive outcomes is even stronger currency than having positive situations.
For example if you have people treating you rudely but you sidestep it like a champion, you will look even better than if people treated you with respect.
And if you enter into a room where nobody knows and you make friends on the fly, that will again show even stronger qualities.
Also, the “great night at the nightclub” where everyone loved you can easily be forgotten the weeks after if that’s the only thing you got going on for you.
Currencies are very relative.
Nobody would exchange a million in cash for a hunting rifle these days. But if society were to collapse and we’d get thrown back to stone age, then a million in cash is useless scrap paper and a hunting rifle becomes priceless.
Social currency is the same.
Any type of skill is a currency and how people will value is highly dependent on the situation, the person and the specific need in the specific time.
So for example if you’re buying a house and someone introduces you to a realtor who can share tips and knowledge, that realtor is hot currency. But after you bought a house and don’t have a cent left? That realtor better have something else going on for him.
Subjectivity also plays a role.
There are some standards of beauty and style, but there is also a level of subjectivity.
However, again, that is not to say that everything is relative. As we’ve already seen, some social currencies are better investments than others as they simply posses broader appeal and stronger adaptability.
High Value People: Who are They & What They Want
People with lots of value tend to have many of the qualities listed above.
And high value people have, of course, lots of value to give. But guess what? They prefer giving to other high value people.
The social exchange theory says that people who have a lot to give also demand a lot back. And if you’re a high value person, it doesn’t make sense for you to enter into an exchange with someone who doesn’t have anything to give back.
The rule of social exchange is the reason why people tend to pair up with mates who are similar in socio-economical background, education and even level of beauty.
Also high value people often experience lower value people trying to piggyback on their success, their status or their beauty. It gets tiresome and people with a lot to give tend to be wary and heavily guarded against people who seem to be just out to take.
The Burden of High Value: The Psychology
Imagine this situation:
Sara is the head recruiter of a major corporation. She’s smart, cute and takes care of herself. She has lots of value, particularly among those looking for employment or a career switch -or a mate-.
Sara has experienced lots of people pleading for help and then sending poor CVs with terrible cover letters that wasted hours of her time, including some friend of friends who put her in the difficult situation of having to refuse them. Some colleagues are also out swinging for her value: it’s almost routine that at the company’s parties someone gets drunk and sloppily tries to get it on with her. Last time one of her reports also awkwardly confessed his love and now they are both pretending it never happened.
She tries to fight it, but she can’t resist feeling a bit irritated for being a target to many simply because of her position or for her looks. She’d wish people could just see her for who she really is.
She particularly feels a pang of resentment when she sees the eyes of people brightening up when she mentions her job. She feels they only care about what she can do for them, and not about who she really is.
That’s how many high value people often feel in the presence of the many value takers trying to get something from them. That is, trying to get something from her without giving anything back.
Value Takers: Who Are They?
Most people tend to cluster around the middle and the average. Such as, most people are not particularly rich in social value to give and neither are they major social value takers.
However, it’s been my experience that the most consistent ones to fall afoul of the rules of social exchange show the following traits:
- Social Climbers: they see people only for what they can do for them -the ones brightening up when Sara mentions her job-
- Nervous & Insecure: states are contagious, nervous people make us feel nervous and we don’t appreciate that
- Egocentric: we all are the center of our own worlds and resent the “me, me, me” people who claim that spot all for themselves
- Braggarts: we like people who make us feel important, not those out to prove they are important
- Chatterboxes: we like to be heard, we don’t like to listening to nonstop blabber
- Teachers: people who “teach” without first making sure we want to learn. It’s annoying because the teacher position assumes superiority (and hence our inferiority), and that’s a role that should be given, not taken.
- Socially Oblivious: have no idea of how social dynamics work (one example below)
Shy, loners and socially awkward.
This deserves a special mention. While we could argue that some of the above are personality flaws, being overly shy or socially awkward is more about skills. Shy and socially awkward people can otherwise be amazing human beings.
But the lack of social skills still makes them a social liability.
I have met many great human beings whom I would have loved to bring with me somewhere. But then I would think: he/she is going to stand all by himself and will only talk to me. The socially awkward and overly shy indeed are often overly dependent on you to have a good time and make you feel like a babysitter.
It might sound harsh to say, but it doesn’t make it any less true: overly shy and socially awkward people are a bigger social liability than any of the above category: not only they will make you look bad for having uncool friends, but they will be a drag on your time and freedom.
Value Takers: It’s All About Timing
The most important instances of value taking happens at the beginning of a relationship.
When a relationship is still fresh, there’s no past history, no favors done and taken and no goodwill. Also, the balance is exactly at 0.
And the social exchange theory tells us that when people are getting to know each other they are unconsciously weighing each other up in terms of possible utility.
Conversely, it’s often acceptable to ask and take when you have a solid relationship already in place because you’ve likely given already a lot and you will likely give more in the future, so there’s more leeway.
Exception: a high infatuation at the beginning of a romantic relationship can be the exception that confirms the rule as people will blindly give without looking at the scores (Rusbult).
Typical Value Taker Sentences:
As we’ve just seen any request at the early beginning of a relationship can easily tip the balance between givers, takers, and the worst moochers of them all :).
Here are some examples of early deal breakers:
“lemme know when you’re having some cool party (so I can tag along)”
“are you doing something tonight (so I can tag along)”
“can I pick your brain over coffe sometimes (you give, I take)”
“can you help me with… “
“please, please, please… “
You will recognize that all these messages are requests that don’t give anything back.
Sometimes just a little fix could make them more balanced. For example the guy who wants to pick your brain could invite you to lunch. Lunch is a small token of course, but more than the monetary value it shows that the inviter gets it and shows respect and consideration for your time and knowledge.
Social Exchange Market: Bring to Get
The most important take away is this:
People form relationships based on amount of social value they can give.
The more you can bring with you in the social exchange market, the more you can take back home with you.
The social exchange theory gives you a powerful paradigm with which to approach social interactions.
Granted, social dynamics do not always bend to the most rational and economical aspects of the social exchange theory.
Indeed, reading social dynamics as cold, rational exchanges is the best way NOT to develop deeper, more human relationships (read more on social norms VS market norms).
But discounting the whole paradigm would be a mistake.
The social exchange theory provides indeed a strong framework to explain many social intricacies which would otherwise be difficult to grasp.
I would say that two major take away from the social exchange theory are:
- Focus on what you bring to the table: Make this your N.1 rule of social exchange
- Assess takers and givers: Are the people around you taking or giving? Cut out the takers, give more to the givers.