Paul Baltes and his colleagues developed a model named Selective Optimization with CompensationModel (SOC) wherein an interaction between three processes, i.e., selection, compensation and optimization are depicted. 

Selection processes serve to choose goals, and life tasks, whereas optimization and compensation lead to enhancing chosen goals. 

For example, older musicians may reduce the number of pieces they play (selection), rehearse them more often (optimization), and sing them in a lower key (compensation).This way they continue their music concerts. 

Take another example, suppose a child’s ambition is to become a doctor, among the various careers s/he has opted for the profession of a doctor (selection) based on her/his interests and aptitude. S/he has to work hard to score good marks in science subjects (optimization). If s/he lacks current scientific knowledge will do additional readings to increase the knowledge in new scientific areas (compensation).

Here you can see that for achieving desired ambition, the child acquired and applied goal-relevant means and practise goal-relevant skills.. 

The basic assumption of the selective optimization with compensation (SOC) model is that the three processes form a system of behavioural action that generates and regulates development and aging. 

By becoming older, individuals select from a range of possibilities due to two reasons 

i) Elective selection and ii) Loss based selection. Elective selection occurs when one chooses to reduce one’s involvement to fewer domains as a result of new tasks. 

For example, during 10th class, students drop out of some social organizations because of more time required for her/his studies. Loss based selection occurs when one reduced involvement in some other activities as a result of expected losses in personal or environmental resources. Or it refers to restructuring of one’s goal hierarchy by emphasizing on the most important goal. Compensation means the use of alternative methods when the earlier preferred methods lost its effectiveness. 

It is different from selection in the sense that selection refers to choice of goals whereas compensation refers to choice of methods. 

For example, a visually impaired student who loses her/ his ability in reading may compensate in reading by using Braille system. 

The last process is optimization which refers to the application of methods adopted to achieve selected goals. Optimization involves minimizing losses and maximizing gains. The focus of optimization is on the best match possible between one’s resources (biological, psychological, and socio-cultural) and one’s desired goals. As individuals cannot achieve optimal outcomes in everything, development becomes an active process of selecting the right goals and sometimes compensating to achieve the desired goal.