When A Diamond Isn't Forever

New research shows that the value of a diamond engagement ring is affected by the story people attach to it.

That means when a relationship tanks, so does the value of the ring, according to the study.

It found that rings disclosed as products of divorce and other failed relationships were much less likely to sell — and sold at lower prices — than rings without a negative history.

That suggests previous research that shows consumer expectations are met when an item cleanly fits into a category is not the full story, said Anne Bowers, Ph.D., the study’s researcher.

“In some sense, these findings are the exact opposite,” said Bowers, an associate professor of strategic management at the University of Toronto’s Rotman School of Management. “Here’s a product that, technically speaking, fits exactly the criteria for an engagement ring, and yet you still have problems.”

The study’s two parts revealed similar findings.

In the first, an analysis of data from 1.5 million eBay listings of diamond solitaire engagement rings over a 13-month period showed rings with no disclosed negative history were most likely to sell and at a higher price. Rings where sellers disclosed a divorce or other failed relationship — marked by comments such as “not going to happen” or “right ring, wrong guy” — were less successful.

A separate survey showed that even though participants believed a diamond ring from a divorce was most likely to be authentic — compared to the same one from a happy marriage or a jewelry store — it was the opposite when it came to how much they’d be willing to pay for it, according to the researcher.

The results mean researchers should “think more carefully about what it is that defines whether or not you fit into a market,” Bowers said. That includes considering “more than just physical characteristics — but also social characteristics” that define a market category, she added.

Bowers concludes with this advice for the heartbroken looking to sell a ring: “Actual purchases versus number of rings listed suggest that sales are really rare in online markets no matter what the reason. Anecdotally speaking, if you want money quickly, the best hope you have is to try to sell it back to the jeweler you bought it from, but be prepared to take a big loss.”

The study was published in Advances in Strategic Management.

Source: University of Toronto’s Rotman School of Management
 
PHOTO: Anne Bowers is an Associate Professor of Strategic Management at the University of Toronto’s Rotman School of Management. Credit: Rotman School of Management.