Social Exchange Theory: Unlocking Social Success

The Social Exchange Theory is foundational to effective socialization, and to life success in general.

In its simplest forms, the social exchange is logical, and, for many, even intuitive.

And yet, too many people fail at relationships -and at life- because they either don’t get them or don’t apply them.

This article lays the foundations of social exchange theory.
And here, we lay out the more practical applications.

social exchange theory representation

Definitions

Let’s review the most relevant definitions of the social exchange theory:

The social exchange theory is:

A framework model that looks at social relationships as exchanges among individuals who seek to maximize their selfish interests.

The social exchange theory starts from the (proven) premise that people seek relationships that add value to their lives, advance their interests, and generally make them better off.

Value is:

In social exchanges, social value is an umbrella term for everything that makes or can make people better off (value-positive)

What people want and appreciate is value-positive, and what they dislike and avoid is value-taking.

Think of it in an all-encompassing way.
Making people feel good, or simply being a pleasant person to talk to are also forms of value.

High-value people are generally value-positive people who provide -or who could provide- what others want.
For the simple fact that they do -or can– give lots of value, high-value people are wanted and sought after.

Value-taking people instead make others worse off, and for this simple reason, they are shunned, avoided, and disliked.

Being high value, or providing value, creates social capital.

Social accounting is:

The amounts and balances (positive or negative) of actual or potential value-giving transactions (creating social credit) and value-taking transactions (creating social debt) that people keep track of

The premise of social accounting is that people keep track of who is giving and who is taking.

There is evidence that almost everyone keeps a “social accounting tab” in their minds (Buss, 2019).

The computation and the results of our mental social accounting influence people’s behavior.
When we expect a value-negative transaction, we avoid people. and when we see the potential for a value-positive transaction, we welcome people -or maybe even chase them-.
And we are more likely to follow the value-givers and be influenced by them.

Social capital is:

Social capital is a measure of the social credit (or social debt, in case of negative social capital) you have with other individuals. 

Having lots of social capital means that people see you as someone who provided lots of value -or who can provide lots of value-.

It means that people like you, want something from you, and want to be around you because you lift them up -or can lift them up-.

Having lots of social capital also means you have lots of goodwill, leverage, and influence over someone. Social capital allows you to ask for something back, if you want, and people are far more likely to give it to you.

You can gain social capital by giving value to others, or by simply being a high-value person (“passive social capital” based on the potential for giving).

Social currencies are:

A social currency is a specific form of value that people seek in social exchanges

Value can come in all different forms.

The currency is the specific form of value that is being offered or traded.

For example, a physical trait like beauty, a character trait like kindness, or a more material benefit like owning a villa in Tuscany.

social exchange infographic: how people approach it

Quick heads up: you can’t just “give” and expect to win. That’s naive. You need to give SMART. That’s a foundational principle of TPM

Shallow VS Deep

There are countless currencies that people exchange in the social marketplace.

One of the most helpful and insightful ways to develop social strategies is to divide the currencies in terms of “visibility”.

We will call them “layers”, “external layers” for high-visibility social currencies, and “inner layers”, or “deeper layers” for low-visibility currencies.

External Layers:

External layers are the qualities that people first notice about you.

They include:

  • Beauty
  • Style
  • Fitness
  • Body language
  • Posture
  • Walk

Deeper Layers:

Deeper layer currencies are not directly visible.

To access the deeper layer people need to get to know you.
In technical terms, they are “high opacity”.

They include:

  • Humor
  • Knowledge
  • Connections
  • Life achievements
  • Mastery (of something)
  • Future potential (to acquire any of the above)

In this preview we help men increase both layers:

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We never share emails & only write to give value

Being VS Appearing: A False Dichotomy

Now it makes sense, doesn’t it?

The old “being” VS “appearing” argument deals with the visibility of social currencies.

“Appearing” refers to the external layers, while “being” refers to the deeper layers.

Some people virtue-signal by scoffing at “appearing” and say they prioritize “being”.
Of course, that’s rarely true.
Deep down people know that both are valuable.

But one is readily visible, and the other… The other you need to learn how to make it visible.

Appearing IS Being (& Vice Versa)

The “appearing VS being” dichotomy is bogus.

However tenuous, there is a relationship between external and internal traits (Miller, 2000).

And when it comes to perception, the link is even stronger.
Both layers always influence each other, and feed into each other.

For example:

  • Beautiful people are perceived as smarter (Kanazawa, 2004)
  • People in authority positions are perceived as taller (Bowden, 2013)
  • Great personalities who make us feel good are more attractive (Tornquist, 2015)

Of course, the opposite is also true.
Value-negative appearances make you across as a worse person. And value-negative personality traits make you come across as less physically attractive.

External Layers Are Pass-Through for Deeper Ones

Here’s an important real-life application for you:

Most people are not interested in 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.

External qualities can help you get your foot in the door.
The better your external qualities, the more of a chance you will have to also showcase your deeper ones.

Example:

How willing are you to talk with a smelly homeless in tattered clothes?

That homeless woman is an extreme example of negative passive value.
She might have much wisdom to share, but few people will want to know. And it’s all because she has negative external currencies.

Just by associating with a homeless person, you can lose status. So the homeless, sadly, is a value taker just by being homeless.

example of social value with picture of attractive woman next to homeless woman

Who would you rather date befriend, or even talk to? Easy choice. The woman on the left isn’t just more attractive. She also sub-communicates better “deeper” character-based traits

The Relativity of “Value”

Social value is relative.

In economic terms, a $1.000 hunting rifle has very low value outside of hunting aficionados.

But if society were to collapse, that hunting rifle would be invaluable.

Currencies in social exchanges are similar.

Any type of skill or positive trait is a positive currency.
But how much people actually value them is highly dependent on the situation, the person, and the specific need in the specific circumstances.

Examples abound.

Take the sexual market value, for instance.
If a man is rich but a lady is just looking for a one-night rebound, his wealth matters little.

This is why moving to sexual marketplaces that are more in line with your goals is a great sexual market value hack to increase your returns.

Environmental Relativity

There’s an environmental element to the value we possess in someone’s eyes.

A professor can be invisible 90% of his life, but when he steps into his classroom, his value shoots up.
Many students crave his approval.

Or one can be a very average guy, but if he brings a date to a club where he skips the line, gets served quicker and everyone says hi to him, he looks like he has loads of status (a form of value).

Role-Based Relativity

Sometimes your job or role in an exchange make you high or low value.

social exchange for a high value female recruiter

👉 Job seekers looking for an interview are low power

Individual Variance Relativity: Focus on Large Appeal

Individual variance, or subjectivity, plays a role.

There are general standards of beauty and style, but there is also a level of subjectivity.

However, the relativity is not infinitely elastic.
Some social currencies tend to be appreciated by everyone and have a large appeal (“hard currencies”), while some others are more situation-specific, or more individual-specific (“soft currencies”).

Marketability: Selling Your Value Well

In economic terms first:

  • 1 Million USD: a million in United States Dollars cash gives you great options to access goods. And if people don’t take USD, you can easily convert it.
  • 1 Million USD in Ukrainian Hryvnia: it gets complicated now. You need to either be in Ukraine or convert it -and few people want to take that-.
  • 1 million USD in Palladium: it’s even more impractical. You can’t trade it easily, and how are you even going to convert it?

All currencies have the same nominal value.
And they all take the same effort to acquire.
But they heavily differ on how readily they are accepted.

Social currencies are similar.
It’s your job to market your social currencies in a way that people appreciate.

This website helps you with that.
For example:

Mindset hack #1: switch to a “WIIFT mindset”

This is one of the most important mindset shifts in life.

The easiest way to increase your social efficacy is to stop approaching others asking for stuff, but to instead approach social exchange with this mindset:

What can I, including my labor, skills, and traits do for others?

This is the “what’s in it for them” approach to social relationships.

When you think that way, you will automatically think in ways that market your currencies well.

High-Value People

Here is a high-level definition for high-value people

High-value people are individuals with an abundance of traits, skills, or possessions that others enjoy, or want

Easy, right?

And the more high-value people you have around your life, the more you become high-value.

But guess what?

High-value people prefer giving value to other high-value people.

Why?

Because they can get back more, of course!

The social exchange theory predicts 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 law of social exchange is the reason why people tend to pair up with mates who are similar in socioeconomic background, education, and general physical attractiveness.

Also, keep this in mind:

High-value people perceive people with little value to offer as a personal risk.

Low-value people trying to hobnob with high-value people are under heavy scrutiny as “potential leechers” of value, people who ask and give nothing.

The Burden of High Value: An Example

High value people have different life experiences than most.

It’s important to understand that to network, befriend, or date them.

For practical approaches, see Power University.

Low-Value People

There are countless ways of being a value taker.

Some of them include:

  • Nasty Social Climbers: value-taking social climbers push others down
  • Complainers: they are value-taking with the go-getters of this world, who ruthlessly cut them out
  • Nervous & Insecure: states are contagious, and social interactions become unpleasurable
  • Party poopers/mood dampeners: they take value by making people sadder
  • Socially Oblivious: have no idea of how social dynamics and power dynamics work (one example below)

Being socially oblivious is particularly dangerous since low-value and socially oblivious people don’t even realize they enter relationships by asking without giving.

Also, read:

17 Early Signs She’s a Low Value Woman

Social Exchange Manipulation

Manipulation is part and parcel of human relationships:

infographic of social exchange manipulation

But here’s the great news:

Now that you understand the basics of social exchanges, you are also better placed to spot manipulation -and deal with it-.

Here’s an overview of social exchange manipulations with some examples:

social exchange manipulation matrix

In simple terms, “social scalpers” are manipulators who abuse the reciprocity of the social exchange system to:

  1. make it seem like they are giving more than they actually are (“credit inflating”)
  2. make you feel more socially indebted than you actually are (“debt inflating”)
  3. make you feel like you are giving less than you actually are (“credit erasing”)
  4. make it seem like they have a smaller social debt than they actually have (“debt erasing “)

And then they will use those extra credits to get more concessions in negotiations, more favors in friendships, more money in salary negotiations, win more arguments in relationships, and, in general, more power and control over you.

Summary

The social exchange theory borrows from game theory and economics (rational choice theory & Chicago school) to analyze social dynamics.

As for almost any model, it’s inherently limited to explain and include the full breadth of human relationships.
For example, it does not fully account for psychological nuances, emotions & feelings, soft power (and judge roles), power dynamics, or social frames.

Yet, it’s one of the best models to provide the foundational bedrock to understand social dynamics, and be more effective in it.

Also read:

2 thoughts on “Social Exchange Theory: Unlocking Social Success”

  1. Are there any example of how to rebalance & bring something to the table? For example, when approaching an expert to coach &/or mentor in order to skill up & learn; what can I offer in exchange? Perhaps the simple answer is to just ask them? “What can I do for you in exchange for some of your time?”

    1. Lucio Buffalmano

      When you’re not sure what you can offer, asking what you can do for them is always 100x better than just asking to help you. Even if you can’t do anything, it shows your willingness of giving back and not just taking, which already puts you in the top 10%.
      I would also add a few options of things you can do for them, juts to show that you’re serious about it.

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