George Homans’ Social Exchange Theory

Weber’s cultural approach emphasizes the endogenous preferences. He thinks that cultural belief shapes one’s interests and preferences, which then guides one’s action and behaviours.

Granovetter argues that individuals are not atomized, but involve in social network. Social relations can affect people’s economic actions, also provides information and basis for trust and credible commitment. (Embeddedness and relational approach)

Note that sociological approaches on economical explanation:

1. Cultural approach


2. Embeddedness and relational approach


3. Social exchange approach

Homan’s social exchange approach

Exchange characterizes all human interactions. Like economic exchange, social exchange is a universal human trait, it also follows the same utilitarian laws as in economic exchanges.

Homan aimed to develop general proposition that identified social mechanisms universal to human interactions and to show how these hold empirically.

Theory of social exchange:

Social control, a stabilize behaviour, is intrinsic to social interaction. Repeated social exchange builds up stable social relationship, leads to social equilibrium. There are rewards and costs in social exchanges, like in economic exchanges, but in social exchange context, rewards and costs can be material and non-material.

Social structures emerge from human interactions, repeated exchanges are the foundation of all social organization. Power, authority and hierarchy are formed in give and take in social exchanges. Those who give more will in return receive more power and authority. “Give, thou shalt be given”. Those who receive more are more likely to be the bottom of society or subordinate positions.

In order to explain why social exchanges are repeated, Homans had the following propositions:

1. Success proposition: for all actions taken by persons, the more often a particular action is rewarded, the more likely that action will be repeated. That is to say that action that is rewarded is likely to be repeated. The shorter intervals between actions and rewards, and intermittent rewards, the more likely the repetition of actions will be.



2. Stimulus proposition: if in the past the occurrence of a particular stimulus, or set of stimuli, has been the occasion in which a person’s action has been rewarded, the more similar stimuli are to the past ones, the more likely the person is to perform the action, or some similar actions.
   
   People generalize from a specific experience and look for conditions that remind them or approximate those attached to a rewarding experience.



3. Value proposition: The more valuable to a person, the more likely for one to perform certain action. Rewards involve positive values, punishment, negative values. Unlike a hedonistic theory, which suggests that people always do to maximize the material gains, value proposition sees that rewards can be both material and nonmaterial gains.



4. Deprivation- satiation proposition: The more recent a person had received a particular reward, the less valuable any further unit of that rewards becomes for him/her.



5. Aggression approval proposition: One did not get what he expected, he can be more aggressive in behaviour, such behaviour may leads to more valuable results form him. Performing approval behaviour is more likely to be valuable for one who did not expect to receive greater rewards.



6. Rationality proposition: facing choices, one will choose that one for which, as perceived by him at the time the value V, of the result multiplied by the probability, P, of getting the result, is the greater. A=VP

Homans on social norms

Social norm is the statement of certain custom behaviour shared by the members of societies, and members are expected to follow conformity to the norm. Social norms are implicit contracts binding members of group.

Social exchange theory is a deductive theory of human interaction. There is no fundamental difference between social and economic exchanges since rewards and costs can be material or non materials. All social life is constituted and emerges from social exchanges, which is regulated by social norms.