Anyone with even a passing interest in development has a litany of reasons that diamonds, and especially diamond engagement rings, are downright awful. The most famous of these is the possibility that you may be buying a “blood diamond”, a term which was neutered into the euphemistic “conflict diamond” by the gem industry’s
successful PR push on the topic totally selfless and completely ingenuous Kimberley Process scheme.
A related but more subtle point is that the Kimberley Process – which certifies certain gems as “conflict-free” – cannot, in principle, wash the notional blood off of your engagement ring. The problem is that blood diamonds and regular diamonds are near-perfect substitutes for most purposes. Deciding to purchase a Kimberley-certified diamond will tend to raise the price of blood diamonds as well, and hence to incentivize their production.
Another problem with diamonds, as with any easily-capturable natural resource, is that the diamond trade can promote the “resource curse”, wherein a reliance on particular kinds of export can induce corruption and undermine political institutions. And of course there’s the problem of engagement-rings-as-arms-race: to some extent a diamond ring is just a positional good, whose value is determined by its size relative to those of your peers (for women) or peers’ fiancees (for men). In that case we can burn up tons of resources for no gain at all, since everyone else is trying to win the same competition.
But the simplest reason to disdain the diamond engagement ring is that, frankly, it’s kind of silly. We (and by “we” I mean “other Americans besides myself”) pay exorbitant amounts of money for shiny, fairly fragile rocks with no resale value. I had had a passing familiarity with the history of this odd cultural institution, but didn’t know the full story until I came across this thirty-year-old piece from The Atlantic that describes how De Beers invented the concept of the diamond engagement ring, and then used a massive marketing campaign to indoctrinate generations of Americans in the belief that the giving of diamonds is the only legitimate way of proposing marriage. Here’s one of the more telling portions:
In 1951, N. W. Ayer found some resistance to its million-dollar publicity blitz. It noted in its annual strategy review:
The millions of brides and brides-to-be are subjected to at least two important pressures that work against the diamond engagement ring. Among the more prosperous, there is the sophisticated urge to be different as a means of being smart…. the lower-income groups would like to show more for the money than they can find in the diamond they can afford…
To remedy these problems, the advertising agency argued, “It is essential that these pressures be met by the constant publicity to show that only the diamond is everywhere accepted and recognized as the symbol of betrothal.”
The whole thing is interesting – De Beers also worked to shape demand and supply in other nefarious ways. But it is the invention of a preference for diamond engagement rings that I find the most disturbing. Economists tend to take preferences as given – de gustibus non est disputandum – and assume that any distribution of goods that optimally satisfies existing preferences is efficient. The example of diamond engagement rings exposes a deep flaw in that unspoken central principle of economics: what if our preferences are bad? What if powerful companies use their vast resources to invent a preference for somethig that objectively looks like a stupid waste of money and time? What if we blow billions of dollars annually on symbolic crystals to win arms races within our social circles, inadvertently leading to brutal killings and the undermining of foreign governments? Maybe it’s time to rethink whether it’s okay to judge preferences on their merits.