203. Diamonds Are a Marriage Counselor’s Best Friend

It may seem like winning a valuable diamond is an unalloyed victory. It's not. It's not even clear that a diamond is so valuable.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Stephen J. Dubner?

  Freakonomics Radio is sponsored by Progressive. Whoever says saving money is hard doesn't know that new customers who bundle and save with Progressive save hundreds because switching your home and auto insurance is better than cutting down on the things you love, like those iced lattes that help you get ready to face the day. So switch your home and auto to Progressive and see if you could save and keep sipping away. Get your quote today at progressive.com. Progressive Casualty Insurance Company affiliates and other insurers. Not available in all states. Freakonomics Radio is sponsored by PNC Bank. Boring. Great word, bad rep. Yet, time and time again, here at Freakonomics, we find that when something culture-changing happens,

• 0:43Stephen J. Dubner?

  boring things like calculations and careful planning are usually behind it. Which begs the question, why not apply it to other aspects of life, like banking, for example? Well, PNC Bank did since its inception, proving time and again that the best banking strategy isn't the exciting type, but the steady, reliable, definitely not YOLO type. PNC Bank. Brilliantly boring since 1865. Brilliantly boring since 1865 is a registered mark of the PNC Financial Services Group, Inc. PNC Bank, National Association, Member, FDIC. Freakonomics Radio is sponsored by Mint Mobile. With Mint Mobile's summer sale, all of Mint's

• 1:25Stephen J. Dubner?

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• 2:11Stephen J. Dubner?

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• 2:55Stephen J. Dubner?

  In the theater, there is a principle known as Chekhov's Gun. Comes from something once said by Anton Chekhov, the great Russian author and playwright. "You mustn't put a loaded rifle onstage if no one intends to fire it. You shouldn't make promises." Chekhov, who was also a doctor and a very wise man, knew what he was talking about.

• 3:15Speaker 01

  He's the most produced playwright after Shakespeare, and there are a lot of guns in his plays.

• 3:23Stephen J. Dubner?

  That's Laura Strausfeld, a Chekhov expert. She is a visiting scholar at Columbia University's Harriman Institute.

• 3:30Speaker 01

  The use of Chekhov's Gun implies certain number of things. For example, that there's something inherently dangerous. Someone will get hurt.

• 3:42Stephen J. Dubner?

  So if you're a writer, which I happen to be, you don't put something in your story, something potentially explosive, unless it's going to explode. You don't, for instance, introduce a nice Midwestern couple just to talk about how nice they are.

• 3:59Stephen J. Dubner?

  I've never asked anyone this question before, but as marriages go, on a scale of like one to 10, 10 being the best, how would you rate your marriage? I would say presently. Wait, before you do it, hang on. I both want you to say the number at the same time. Oh, my goodness. Dear. You're brutal. I know, I am brutal. So I'm gonna, I'm gonna say one, two, three, and then I want you each to say the number. So think your number, but don't say it. Okay? Got it? Now? Yes. One, two, three. Six. Wow. All right.

• 4:38Speaker 01

  This Chekhov's gun is in your life. You know, the stuff is going to go down and you will with it.

• 4:46Stephen J. Dubner?

  So what was the vibe between you two when you went to bed that night?

• 4:49Speaker 02

  Well, it was not good.

• 4:50Stephen J. Dubner?

  It was horrible.

• 4:54Stephen J. Dubner?

  And what was it that made the vibe so horrible? What was it that knocked this marriage down to an eight or a six?

• 5:03Speaker 02

  It's a princess cut, one carat, and it's, it is really nice. It's a beautiful diamond.

• 5:23Speaker 03

  From WNYC, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dubner.

• 5:47Stephen J. Dubner?

  We're on the line with a couple from Grand Ledge, Michigan. That's a suburb of Lansing. My name's Jason Serrata.

• 5:53Speaker 04

  And I am Kristin Serrata.

• 5:55Stephen J. Dubner?

  Kristin and Jason are both turning 40 this year. They have two kids, a boy and a girl. Kristin is a nurse and nursing supervisor at a hospital emergency room in Lansing. She works a night shift. Jason is a paramedic with the fire department there. He's also working toward becoming a financial advisor. Jason and Kristin have a lot in common. How they think about money is not one of those things.

• 6:20Speaker 04

  To kind of give you a small example, we moved from a smaller home to a nicer, larger home, probably about seven years ago. And within the first three or four months there... I was looking at our kitchen table light and making a grocery list. And on that grocery list had light bulbs. And as I'm looking at the table, you know, there's like a five or six light bulb chandelier and three of them are out. And he looks at my grocery list and says, why are you getting light bulbs? I said, well, we're already burned out. He said, they're not burned out. I just unscrewed them a teeny little bit so that... And I said, why did you do that? And he said, well, we don't, you know, it's the cost, the energy savings, as well as we don't actually need this much light right here.

• 7:05Speaker 04

  And as I started going through the house and paying attention, you know, in our bathroom, we have the Jack and Jill sinks and there's three light bulbs above my sink, three above his, and, you know, one is screwed out on each side. And so the way he thinks is, yes, we can have that, but do we need to have that?

• 7:27Stephen J. Dubner?

  And that is the crux of their difference. Jason divides everything into needs versus wants. Kristen doesn't. They've been together 13 years.

• 7:37Speaker 02

  We met one night out where I said I would never meet my future wife, and that was at a bar.

• 7:44Speaker 04

  Jason had a list of very specific things that when he met his wife, she was going to, you know, be A, B, and C. And so for an example, one of the things that he had always said was, you know, my woman I meet is, I'm not going to meet her in a bar. Her parents will be married still, and my parents have been divorced since I was six. She's not going to swear nor smoke. And at the time, I broke all of those rules for him. So I no longer smoke at all.

• 8:15Speaker 02

  Do you still swear?

• 8:17Speaker 04

  Um, I do.

• 8:18Speaker 02

  Only when she's mad at me.

• 8:24Speaker 04

  What he's leaving out is he, I think he kind of had a little wild past and then he became what I call, you know, born again Christian somewhere in his early to mid twenties. And then that's where his big list of things came from.

• 8:42Stephen J. Dubner?

  One item on Jason's list is a conservative approach to family finance. This is apparently why Jason rates their marriage as only a six.

• 8:52Speaker 04

  If I submitted to all of Jason's financial rules, then it would be a 10. That's where it lies.

• 8:59Stephen J. Dubner?

  Oh, so what does he want you to do financially that you're not doing?

• 9:03Speaker 04

  Not spend one dime.

• 9:11Stephen J. Dubner?

  A few months ago, a neighborhood friend invited them to a Christmas party that was a fundraiser for a local agency called Child and Family Charities.

• 9:19Speaker 04

  She just sent me this text message, "Hey, are you guys available? Do you want to come and do this thing?" So I look it up online, and it lists the costs for a couple as like 220 or 250 for a couple to go. And she hadn't specified in the text message whether we were coming as, you know, on her or like, "Do you want to come and this is what you have to pay?" So I mentioned it to Jason. He's like, "You need to figure that part out first because that's going to affect our decision."

• 9:50Stephen J. Dubner?

  So Kristin texted the friend back.

• 9:52Speaker 04

  I kind of said, "You know, tell me more about this. Is there, you know, a cost?" And things like that. I played like I hadn't looked into it. And she responded with, "Yes, there's a cost, but you'd be coming as, you know, our guest."

• 10:04Stephen J. Dubner?

  To Jason, this looked like a pretty good deal. Free tickets to a nice fancy party with dinner and drinks. They didn't even need a babysitter. Kristin's mom lives with them and looks after the kids.

• 10:14Speaker 04

  I did have to go buy a, I bought a dress that was...

• 10:17Stephen J. Dubner?

  What did the dress cost you?

• 10:19Speaker 04

  I think a hun, it was 100, 110, Jason, I think, something like that.

• 10:23Speaker 02

  Probably just now finding that out.

• 10:24Speaker 04

  No, you're not.

• 10:28Stephen J. Dubner?

  Do you see yourself wearing it many more times in the future, though, Kristin?

• 10:32Speaker 04

  I would, I mean, it's something that you could wear. It's not like a to the floor kind of a gown. It's something I could wear to a wedding or, or, you know, a Christmas event, something like that.

• 10:42Stephen J. Dubner?

  All right, so Jason, theoretically, you could amortize that dress.

• 10:45Speaker 02

  Yeah, maybe.

• 10:47Speaker 04

  He could.

• 10:48Speaker 02

  I doubt she'll wear it again.

• 10:50Stephen J. Dubner?

  But overall, it wasn't a bad deal. The friends who invited Kristen and Jason even drove them to the party.

• 10:56Speaker 04

  So we didn't even pay for gas.

• 10:57Speaker 02

  Yeah, I don't. See, that's how my mind is supposed to work.

• 11:02Stephen J. Dubner?

  Okay, yeah. See, you're rubbing off on her.

• 11:05Speaker 02

  Yeah, exactly.

• 11:06Speaker 04

  I just know how we think, so.

• 11:12Stephen J. Dubner?

  By the time they walked into the benefit, Kristen had just one concern.

• 11:16Speaker 04

  I was a little anxious, thinking, I really hope he's not planning on going in there and then we just reap the benefit and then he does not make any contribution.

• 11:27Stephen J. Dubner?

  Now, to his credit, Jason says he was fully prepared to contribute. There was going to be a silent auction that he planned to bid in.

• 11:35Speaker 02

  That week, we were, I could do a couple hundred dollars, if not more.

• 11:42Stephen J. Dubner?

  But once they started looking around, they realized that the silent auction items, restaurant gift cards, things like that, even these were going for more than a couple hundred dollars. Then Jason noticed there was something else going on besides the silent auction.

• 11:54Speaker 02

  There's one table off by itself that had a bunch of champagne glasses on it.

• 12:01Stephen J. Dubner?

  Mm-hmm.

• 12:01Speaker 02

  And, you know, I walk over and say, you know, what's this table for? And they explain that it's a raffle. You can win a loose diamond.

• 12:14Stephen J. Dubner?

  A local jeweler had donated a diamond that was estimated to be worth $7,500. For $35, you got a glass of champagne and one raffle ticket for the diamond. Two tickets and two glasses of champagne for 50 bucks. Jason, being Jason, wanted to know more.

• 12:31Speaker 02

  My first question was, well, how many of these tickets are you selling?

• 12:35Stephen J. Dubner?

  Makes sense, you're trying to calculate your odds.

• 12:37Speaker 02

  Well, it does.

• 12:38Stephen J. Dubner?

  Did they know how many tickets were being sold for the diamond?

• 12:41Speaker 02

  Yeah, she said, I want to say right around 250 to 300 is what she said.

• 12:46Stephen J. Dubner?

  Okay, all right.

• 12:47Speaker 02

  I'm like, okay, well, give me two.

• 12:52Stephen J. Dubner?

  So, did you really think about winning? And like, that would be a really good investment? $50 for $7,500 diamond? Or were you just thinking, this is kind of the sensible way for me to contribute?

• 13:03Speaker 02

  For me, I thought that would be a really good investment. I looked at the odds and said, you know what? That's pretty good odds. It's not that bad.

• 13:19Stephen J. Dubner?

  Later in the evening, there was a live auction with bigger items up for bid. A ski weekend, a catered meal cooked in your home.

• 13:26Speaker 02

  They had a fast talker and some spotters to accept your order. And so, you can wave your card up, your card with your number on it.

• 13:39Stephen J. Dubner?

  And these were way, way above Kristin and Jason's budget. So here they are, sitting on their hands at this fundraiser, which they got comped into by their friend, who's sitting at the same table. And did you feel compelled to spend some more for the charity since you were sitting there? Or was it awkward or not really?

• 13:57Speaker 02

  Well, towards the end of the auction, they said, you know, for anybody that wants to just donate, you can just raise your card and we'll come to you and you just give whatever amount you have.

• 14:10Stephen J. Dubner?

  Oh, that's nice of them.

• 14:11Speaker 02

  Yeah, I thought so too.

• 14:14Speaker 04

  But I don't think it was awkward at any point.

• 14:16Stephen J. Dubner?

  No, no.

• 14:17Speaker 04

  I mean, she invited us with an expectation that, you know, come, I think some of it too is, in all honesty, trying to fill her table as well.

• 14:24Stephen J. Dubner?

  Yeah, and you guys sound like good company. I mean, I would want you at my table at a dinner.

• 14:28Speaker 04

  Well, thank you.

• 14:29Speaker 02

  Thank you.

• 14:30Stephen J. Dubner?

  You're welcome.

• 14:31Speaker 02

  We think we're fun.

• 14:32Speaker 04

  We're usually entertaining. So, yes, as they're offering up, you know, after all the live auction is done, and they're saying, you know, if you just want to make a donation now, and some people were, I mean, they were making, you know, pretty large donations. And our friend Sarah, she said, is anyone interested in maybe just making, you know, I think she had said, Jason, maybe $50 or, you know, just a donation. And she opened it up to the whole table. You know, I think we're going to do that. Is anybody else interested? And that was when Jason said, well...

• 15:01Speaker 02

  I look at her and I said, well, I said, well, I look over at the table that's selling the raffle tickets and all the glasses are not sold. They're still there. And I'm thinking, and in my mind, well, that's all right. That's pretty good odds, you know, for me if they're not selling all the tickets. And I said, well, I said, Sarah, I said, what if I just go buy two more champagne glasses?

• 15:29Stephen J. Dubner?

  So that's what he did. 50 bucks, two more glasses of champagne, and two more raffle tickets. Now they're holding four tickets. The event is just about over. Just one more thing, the raffle drawing, to announce the winner of the $7,500 diamond. Jason was listening, tickets in hand, as the number was read off.

• 15:50Speaker 04

  And I happened to be kind of standing by him, but really not paying any attention at all to this drawing, because in my mind, they're going to read it off. We're not winning. So, you know, I'm just kind of socializing. And I hear him yell, actually, you know, I think it was, "Say that again?" And I look at him, and he reads those three numbers off. And I remember him like, winner. And I took the tickets thinking like, are you sure? You know, let me, let me double check this right now.

• 16:16Stephen J. Dubner?

  So your first thought, Kristen, is I cannot wait to wear this diamond, which makes perfect sense.

• 16:20Speaker 04

  I can't believe I got this beautiful diamond.

• 16:23Stephen J. Dubner?

  Jason, what's, what's your first thought? Is your first thought also, man, Kristen will look so beautiful in that diamond?

• 16:30Speaker 04

  Not at all.

• 16:32Speaker 02

  No, it wasn't.

• 16:35Speaker 04

  As a matter of fact, I had even joked, because I know him so well, I had joked to, you know, quite a few of our friends, neighbors were there, and they were just, you know, floored as well that we had won this. And they were all like,

• 16:48Speaker 02

  High fives were going on and everything.

• 16:50Speaker 04

  Yeah, high fives. This is gonna, oh, Kristen, this is gonna be so beautiful. And I said, oh, yeah, come on, this is, this is going on Craigslist tomorrow morning. You know, Jason, are you kidding? You know, I know my husband. Kind of joking?

• 17:02Stephen J. Dubner?

  Kind of joking, but mostly not joking.

• 17:09Stephen J. Dubner?

  They went home that night, elated, still on a high from winning. But at home, it became obvious that Kristen's high was not the same as Jason's high. They started to bicker. They fought. Jason pleaded with Kristen to just go to sleep so they could talk about the diamond the next day.

• 17:32Speaker 04

  In all honesty, you know, if we had $8,000 lying around, would I say, "Please go buy me a diamond"? Absolutely not. I didn't ask for one when we got married. But it was kind of like, okay, this was given to us now, so now why do we have to turn this into cash? You know, why can't I just own it?

• 17:51Stephen J. Dubner?

  And Jason, I'm curious, what was it that made you so eager to think of a plan other than keeping the diamond?

• 18:02Speaker 02

  I just looked at the, I looked at it as the opportunity to have that money to do something else than to have it be a piece of jewelry. We have rings or jewelry from family members that are, I would say, worth very similar to that, that we would never sell.

• 18:20Speaker 04

  It goes, I think, a little bit back into that kind of needs versus wants.

• 18:24Stephen J. Dubner?

  Did you have a plan, or you just knew that the plan was to not own a diamond that expensive?

• 18:30Speaker 04

  He put it towards debt.

• 18:36Stephen J. Dubner?

  Laura Strausfeld, the Chekhov scholar we heard from earlier, says that Kristin and Jason's dilemma reminds her of a Chekhov short story called "The Lottery Ticket." A married couple believe they may have won the lottery.

• 18:52Speaker 01

  They go off in their fantasies about how they might spend the money, and the husbands' imaginings are quite different from the wives', and by the end, they're miserable.

• 19:09Speaker 05

  And he looked at his wife, not with a smile now, no, but with hatred. She glanced at him too, also with hatred and anger. She had her own daydreams, her own plans, her own reflections. She understood perfectly well what her husband's dreams were, and she knew who would be the first to try to grab her winnings.

• 19:30Speaker 01

  Chekhov always has his microscope on intimate relationships. And sort of more superficial moral might be that you bring some kind of windfall into an intimate relationship like a marriage, and you're worse off in the end from it.

• 19:55Stephen J. Dubner?

  Coming up on Freakonomics Radio, can Kristin and Jason resolve their dilemma without resorting to gunfire?

• 20:02Speaker 04

  As a matter of fact, I think yesterday I said, well, you might come home and find it in a ring on my finger.

• 20:08Stephen J. Dubner?

  And is a diamond really as valuable as we think?

• 20:12Speaker 06

  One of the great allusions of our time is that diamonds are forever valuable. They are not.

• 20:22Stephen J. Dubner?

  And stay tuned for the very end of this episode, where we've got an important announcement to make about something happening very soon, on Tuesday, May 5.

• 20:53Stephen J. Dubner?

  Freakonomics Radio is sponsored by Quince. You know those pieces in your closet that you find yourself wearing on repeat? The sweater that goes with everything, the perfect pair of pants, or the tee you somehow always reach for first? Those are the pieces that make getting dressed easy, and that's what Quince does best. Quince focuses on high-quality wardrobe staples made with premium materials like 100% Mongolian cashmere, organic cotton, and merino wool. The styles are timeless, versatile, and designed to become the dependable pieces you reach for day after day. And it's not just clothing. Quince brings that same approach to everything they make, from hotel-quality bedding and bath to kitchen essentials and thoughtfully designed furniture. Find your next fall favorites at Quince. Download the

• 21:37Stephen J. Dubner?

  Quince app for app-exclusive offers, or go to quince.com/freak. Get free shipping on your order and 365-day returns. Now available in Canada and the UK, too. That's Q-U-I-N-C-E.com/freak.

• 21:58Stephen J. Dubner?

  Freakonomics Radio is sponsored by Progressive. Whoever says saving money is hard doesn't know that new customers who bundle and save with Progressive save hundreds because switching your home and auto insurance is better than cutting down on the things you love, like those iced lattes that help you get ready to face the day. So switch your home and auto to Progressive and see if you could save and keep sipping away. Get your quote today at progressive.com. Progressive Casualty Insurance Company, affiliates and other insurers. Not available in all states. Freakonomics Radio is sponsored by PNC Bank. Boring. Great word, bad rep. Yet, time and time again, here at Freakonomics, we find that when something culture-changing happens,

• 22:40Stephen J. Dubner?

  boring things like calculations and careful planning are usually behind it. Which begs the question, why not apply it to other aspects of life, like banking, for example? Well, PNC Bank did since its inception, proving time and again that the best banking strategy isn't the exciting type, but the steady, reliable, definitely not YOLO type. PNC Bank. Brilliantly boring since 1865. Brilliantly boring since 1865 is a registered mark of the PNC Financial Services Group, Inc. PNC Bank, National Association, Member, FDIC.

• 23:20Speaker 03

  From WNYC, this is Freakonomics Radio. Here's your host, Stephen Dubner.

• 23:41Stephen J. Dubner?

  A few months ago, at a charity raffle, Kristin and Jason Cerata won a diamond, estimated to be worth $7,500. She wanted to wear it. He wanted to sell it, which meant that neither of them got what they wanted.

• 23:57Speaker 02

  I would say we both did at one time say we wish we never would have won it.

• 24:00Speaker 04

  We did.

• 24:01Speaker 02

  It did get to that level.

• 24:03Stephen J. Dubner?

  So where is the diamond sitting and does anybody look at it on a regular basis?

• 24:08Speaker 04

  I have no idea where it is, but Jason can fill us both in.

• 24:13Speaker 02

  I don't know if I want to tell you now.

• 24:16Stephen J. Dubner?

  Why don't you tell me, but we'll ask Kristin.

• 24:18Speaker 04

  I'll close my ears.

• 24:20Stephen J. Dubner?

  Yeah, yeah, yeah, that'll work.

• 24:22Speaker 02

  It's in the laundry room, way up high, out of sight, out of mind. So it's not like in a closet with any other jewelry or anything staring at her or reminding her of how mad she wants to be at me.

• 24:36Stephen J. Dubner?

  And Kristin, did you, did you literally not know until just now where it was?

• 24:41Speaker 04

  I honestly figured it was probably somewhere in the laundry room. And I don't think he's truly keeping it from me because I would hope that he trusts me enough to know that I'm not going to go set it in something without his permission. But he also knows me well enough that if I'm seeing it when I'm in there doing laundry, then it's just going to refuel my animosity, I guess. So he, he, he put it out of sight so that it will hopefully be out of mind.

• 25:14Speaker 04

  One thing I did say to him was, if we're going to do something with it, let's do something with it. I don't want a year from now where it's still sitting in the laundry room and we haven't done anything. That, that is going to irritate me.

• 25:26Stephen J. Dubner?

  Yeah, I love that there were kind of two options here. One is for you to wear it and get this joy and utility out of it, and the other is to sell it. And instead you've taken the third, which is stick it in the laundry room, which seems to be like...

• 25:36Speaker 04

  Right. It's just sitting there, you know, going to gather dust. We now have something to do with this diamond and we don't know what to do with it that will make us both feel okay with it. Because now we both have such negative feelings about it that whoever wins is not really winning. You know, we're both kind of losing, if that makes sense.

• 25:55Stephen J. Dubner?

  Did you figure out what you could get for it, roughly?

• 25:58Speaker 02

  We did. We've, if we sold it ourselves, we could get probably four to 5,000.

• 26:09Stephen J. Dubner?

  If they sold the diamond, Jason says, they'd use some of the money to pay down debt. They'd put some in savings. And they might take a vacation. They really want a vacation.

• 26:19Speaker 04

  We both work quite a bit and our schedules really don't align with each other. There's been times where, on a Sunday, he's getting ready to go to work and he'll say, "I'll see you Wednesday." And it's literally, I might see him for a couple hours on Tuesday afternoon, but I work midnights. He's 24-hour shifts at one job and then he's kind of doing a financial advisor-type thing on the side. So, just getting away and having that time with just him and the kids, where we don't have the regular routine of our daily lives. I enjoy doing that, just because we are so busy.

• 26:59Stephen J. Dubner?

  I wondered if the Seratas really could get $4,000 or $5,000 for the diamond. The jeweler who donated it estimated it to be worth $7,500, but what's the resale market like for a loose diamond? And, taking a step further back, why are diamonds so expensive in the first place? Presumably, it's not only because people find them beautiful, it's also, presumably, because they're rare. They are rare, aren't they?

• 27:29Speaker 06

  People believe that diamonds are rare. In fact, diamonds, at least in America, in terms of households who possess them, are the second most common item. The most common item is television sets. Children come in a distant third.

• 27:45Stephen J. Dubner?

  Okay, that may be a bit hyperbolic, but this man knows his diamonds.

• 27:50Speaker 06

  I'm an investigative reporter, and diamonds is one of my favorite subjects.

• 27:55Stephen J. Dubner?

  His name is Edward J. Epstein. He's been writing about the diamond industry for decades, including a book called, "The Rise and Fall of Diamonds." He once performed an experiment that might prove relevant here.

• 28:08Speaker 06

  While I was writing my book, I tried to sell a diamond.

• 28:12Stephen J. Dubner?

  First, he had to buy one. He went to New York's Diamond District on West 47th Street and paid $2,000 for a diamond.

• 28:19Speaker 06

  I waited a week and then I went around to other diamond dealers on 47th Street. And they were offering me things like $300 and $400. So, I realized I was going to lose a great deal of money, which I did.

• 28:32Stephen J. Dubner?

  So the markup alone on diamonds, Epstein quickly learned, was very substantial.

• 28:37Speaker 06

  So they weren't going to pay that when someone tried to sell it. And the diamond, of course, didn't gain in value, so you instantly lost 50 or 60%.

• 28:45Stephen J. Dubner?

  Epstein also wanted to learn how diamonds came to be so expensive and omnipresent.

• 28:51Speaker 06

  The tradition of giving a diamond as an engagement gift really began in the 20th century. Before that, people didn't need a diamond to get engaged.

• 29:01Stephen J. Dubner?

  So how did this tradition get started? Okay, let's go back further in history. When you would see kings and queens from long ago wearing diamonds, the fact is that the stones were precious in part because they were hard to find. Prospectors had to pan for them in riverbeds.

• 29:19Speaker 06

  Then, in South Africa, in the city of Kimberley, they found geological formations called pipes, sort of blue material, giant diameters. They looked like something from outer space. And they found if they took a steam shovel, they could take this material out, which they called Kimberlite, and extract diamonds from it. And suddenly, they could create as large a supply of diamonds as they wanted. Steam shovels were cheap, and diamond prices then fell to about $5 a carat because there were so many of them. This was all in the 1880s. Then a man came along called Cecil Rhodes.

• 29:59Stephen J. Dubner?

  Cecil John Rhodes, as in Rhodes Scholarship Rhodes, as in the founder of Rhodesia, which is now Zimbabwe. Rhodes was also a pretty clever diamond magnate.

• 30:09Speaker 06

  Who said, "Look, we're going to create a worthless, semi-precious stone unless we do something. We have to restrict production to the measurable demand." And he got all the owners of the diamond mines together, and they created a cartel. And the purpose of the cartel was to restrict supply.

• 30:28Stephen J. Dubner?

  In those days, Epstein says, that was easy. Most of the world's diamond mines were in a relatively small area of South Africa.

• 30:36Speaker 06

  He said, "Look, all we have to do is figure out how many people are getting engaged a year. If it's 500,000, we'll only allow 500,000 stones on the market. So they will always seem to be, or appear to be, rare, and the rest we'll just keep in a stockpile." So this worked.

• 30:54Stephen J. Dubner?

  The diamonds syndicate Epstein is describing came to be known as the De Beers Mining Company. It grew to be synonymous with the diamond industry itself. But during the Great Depression, demand fell.

• 31:07Speaker 06

  People just couldn't afford to buy diamonds. So De Beers' stockpile in London, a giant vault, just kept growing. So at one point Ernest Oppenheimer--

• 31:18Stephen J. Dubner?

  He's the man who had taken control of De Beers.

• 31:20Speaker 06

  He actually entertained the plan of dumping the diamonds in the mid-Atlantic. In other words, they were better lost than ever reaching the market.

• 31:35Stephen J. Dubner?

  So, hmm, not exactly the intrinsically valuable item we think of diamonds as today. But as history would have it, World War II was good for the diamond industry. As diamonds are among the hardest-known minerals on Earth, they were good for a variety of industrial uses.

• 31:54Speaker 06

  You needed them to cut steel and make tanks and artillery. And the economies of the world perked up after the war, and De Beers never had to resort to such a drastic strategy.

• 32:07Stephen J. Dubner?

  It was also around this time that De Beers hired the advertising firm N.W. Aire.

• 32:11Speaker 06

  You know, everyone has seen Mad Men on television, where they were 100 times better than Mad Men. They actually understood that what a woman wanted was a tangible measure of love. So they made the diamond into the tangible symbol.

• 32:34Speaker 06

  They also introduced diamonds into Hollywood. They opened an office in Hollywood to put them in films. And its entire business was creating a liaison--

• 32:43Speaker 07

  Difany's.

• 32:44Speaker 06

  --between movie producers and De Beers.

• 32:49Speaker 06

  Songs like Marilyn Monroe singing Diamonds Are a Girl's Best Friend, you know, didn't come out of thin air.

• 33:06Speaker 06

  They gave diamonds to movie producers. They said, "Here, for your wife, here's a beautiful diamond ring. What we want you to do is, in your movie, show that when the woman receives the diamond, the woman, who was a virgin up to this point, suddenly jumps into the arms of the man giving her a diamond." That was actually all in their advertising strategy. They said, "We have to show surprise followed by gratification." So the man believed that by surprising the woman, he was getting the woman. And the woman believed she was getting a tangible measure of his love.

• 33:46Speaker 06

  The bigger the diamond, the more the love.

• 33:54Stephen J. Dubner?

  N.W.A.R. also implanted the notion that diamonds are forever, and therefore, not only a symbol of eternal love, but an investment. The diamond engagement ring. How else could two months' salary last forever? A diamond is forever, De Beers.

• 34:13Speaker 06

  Basically, the idea was that if you spent a month's salary on diamonds, you would have an investment on your wife's finger, which would grow and grow in value as if she was wearing a T-bill or a stock certificate. And women accepted this because the diamond was a lot more beautiful than a treasury bill.

• 34:35Stephen J. Dubner?

  De Beers's control over the diamond market has diminished in recent decades, largely as a result of antitrust regulations in the U.S. and Europe. But one thing that hasn't diminished, at least not much, the overwhelming belief in the monetary value of diamonds. And this, Epstein says, has helped the industry keep a handle on a huge source of diamonds that it does not control, a vast repository known as the overhang.

• 35:02Speaker 06

  The overhang is every diamond ever sold in history that is on someone's finger or in a bank vault or in some drawer somewhere. So the only way it could stop people from selling diamonds they don't want anymore is by creating the idea that so you're stupid to sell it and take cash and buy stocks or buy a car or buy a house. Because the diamond will keep gaining in value while the others are risky investments. The moment people begin thinking well, diamond is just another commodity. It goes up and down in value. Then a huge number of diamonds could come on the market, not from any new diamond mine that's discovered, but from what people have in their bank safety deposit boxes.

• 35:57Speaker 04

  I had to kind of figure out for me, what am I so angry about with this? And I think it just came down to, I wanted to just hear him say, if this is what, if you really want this, then you can have it. You know, what I want, I will put that aside. My instant thoughts of, how am I going to turn this into, you know, cash or whatnot? Because I knew it meant he would be, I don't know if conceding is the right word, but it meant he would be giving up something he is passionate about, which is needs versus wants. And we don't really need this, but if this is what you would like, we'll go that route.

• 36:31Stephen J. Dubner?

  So Jason, you've never said that, I assume?

• 36:35Speaker 02

  No, I wish I was a mind reader though. That would have really helped. And to say it now is just empty.

• 36:41Speaker 04

  No, no.

• 36:42Stephen J. Dubner?

  Are you sure? Wait, wait, wait, wait, wait. Kristin, is that true? If you were to say it now, would you really think it's an empty statement?

• 36:48Speaker 04

  No, I don't.

• 36:49Stephen J. Dubner?

  Well, let me, let me ask you. I mean, I don't want to put you on the spot, nor do I know either of you well enough to offer what I'm about to offer. But do you want to take this opportunity with tape rolling to say that?

• 37:05Speaker 02

  Yeah, I could.

• 37:07Speaker 04

  He could.

• 37:08Speaker 02

  No, no. Honey?

• 37:13Speaker 02

  Honey, if you really wanted to keep it, I would be OK with it. And try my hardest to never bring it up again.

• 37:23Speaker 04

  I believe that to be true. I really do. You know, sometimes Jason, he is so laid back, and I am so emotional, that sometimes I take things that he does as I'm not a priority. And that's kind of where I felt with this ring. Like, you know, what I want to do with it is not a priority. He's going to do what he wants to do. And I kind of, so that's, I think, I had to come to terms with or realize that it's really not actually even about this diamond. It's about something a little more. And in all honesty, do I, do I really want this diamond? Do I still want it sitting in my laundry room? No, I think that's a poor use of it. It's either like, let's, you know, let's put it in something, or let's sell it. But I do feel like, you know, you felt very passionately about finding

• 38:08Speaker 04

  something else to do with this. Then I'm, I'm leaving that up to you. Let's do it.

• 38:12Speaker 02

  And I have to judge whether she is being 100% true with me, or let's say somebody comes to the door, hands me a lot of cash, does she go upstairs and, you know, get really angry with me?

• 38:27Speaker 04

  No.

• 38:28Speaker 02

  And so I, I've got to, in my mind, juggle some things, because if, you know, there would be resentment for me if she kept it, to be completely honest, in one way. Well, she just didn't listen to me.

• 38:52Stephen J. Dubner?

  We ran the Serrata's dilemma past Edward J. Epstein, the diamond writer. Keeping the diamond is just being a prisoner of the illusion. The illusion, that is, that a diamond is in fact rare and therefore inherently valuable. You remember that Epstein lost a lot of money trying to resell a diamond to diamond dealers, which is why he recommends something different for Jason and Kristen. If you want to sell a diamond...

• 39:18Speaker 06

  You have to have as large a market as possible. So my advice to Jason and Christine would be to sell the diamond at an auction and you might find someone else who's a prisoner of the illusion and they might pay you a much better price.

• 39:35Speaker 08

  We ran this idea past them and they seemed to like it. A few weeks later, one of our Freakonomics Radio producers, Christopher Wirth, called the Ceratas to see where they had landed with their diamond.

• 39:52Speaker 02

  After discussing it with Kristen, we have decided to put it on eBay as an auction. And what we're going to do is donate 50% of the proceeds back to the charity that we won it from.

• 40:09Speaker 08

  And so what led you to that decision? Because there was so much going back and forth. I mean, what was the deciding factor?

• 40:15Speaker 02

  Well, like she said, she's going to get more mad at me the longer it sits there and does nothing. And so I just finally decided, okay, if I've gotten her to the point where she's willing to sell it, then let's sell. Let's take this opportunity, let's sell it, let's be able to give back to that charity. And then whatever amount comes at that point in time, then we can discuss what we would do with it.

• 40:46Speaker 04

  Right. If it's not on my finger, it should actually be on somebody else's, so.

• 40:50Speaker 08

  But there seemed to be some resentment on either side. I mean, you both described it as a case where neither person could really win in this whole thing. And that at one point, you both said you wished you'd never won it. I mean, how are you feeling now in terms of, I guess particularly you, Kristen, how are you feeling now that you've decided to go ahead and sell it?

• 41:06Speaker 04

  Honestly, I feel really very good about it, especially because I don't feel, I don't feel strong-armed into this decision at all. I feel that this was something he and I came to together and that was really important. I just wanted to feel like I had kind of a voice in what happened or that I wasn't being forced to do something without considering the possibility of keeping it. And I truly believe that if I had said, you know what, I really want to keep this, I believe that he would have been okay with it.

• 41:46Stephen J. Dubner?

  Okay, so it is happening. Kristin and Jason's diamond is up for auction on eBay right now. You can find it by searching for Freakonomics Charity Diamond. I have to say, I dearly hope there are enough prisoners of illusion out there to drive up the price, maybe even to five figures. After all, half the money is going to child and family charities, the organization that held the fundraisers where the Seratas won the diamond. And remember, this isn't just any diamond. It's the diamond that was won at a raffle, was fought over, was hidden in a laundry room, was fought over some more, and has finally come to a peaceful resolution here on this program. We told Jason and Kristin that we would announce the auction to our Freakonomics Radio listeners.

• 42:32Speaker 02

  Let us know and tell them it comes with a free book or something, too. Freakonomics.

• 42:42Stephen J. Dubner?

  Okay, Jason, good idea. But let me sweeten the pot a little bit. As it turns out, Steve Levitt and I are putting out a new Freakonomics book very soon. On Tuesday, May 5th, we're publishing a book called When to Rob a Bank and 131 more warped suggestions and well-intended rants. It is a compilation of the best blog posts from 10 years' worth of writing at Freakonomics.com. We ask questions like, why don't flight attendants get tipped? If you were a terrorist, how would you attack? And, why does KFC always run out of fried chicken? It is a big, fat, fun book, so please, spread the word. Pre-order yours now. And here's what we'll do for the winner of this diamond auction.

• 43:25Stephen J. Dubner?

  I will get hold of one of the very first copies of When to Rob a Bank that comes off the printing press, and I'll sign it, and I'll mail it to you, the winner. So, if you are in the market for a diamond, get over to eBay. And if you're in the market for a new Freakonomics book, well, go order yours today. And after it comes out, on May 5th, drop us a line at [email protected]. Let us know what you think. By the way, I should tell you that the Seratas have moved the diamond out of their Home to a safe, secure location. I'd like to thank them for their participation in this episode, and also a special thanks to the wonderful Robert Krulwich, who gave voice to Anton Chekhov in this episode. Robert, spasiba bolchoya. Coming up next

• 44:08Stephen J. Dubner?

  week on Freakonomics Radio, we talk with Nate Silver, editor in chief of 538.com. We run our frequently asked questions past him, so you'll find out his favorite sport. I don't know, bowling, I suppose. Just how devoted he is to his work. I don't even always watch, like, the State of the Union, for example. And what you learn about life as you get a bit older. One of the most profound lessons to me about adulthood is that everyone's kind of weird. That's Nate Silver, America's favorite statistical guru of the past, well, maybe ever. That's next time on Freakonomics Radio.

• 45:02Speaker 03

  Freakonomics Radio is produced by WNYC and Dubner Productions. Our staff includes Greg Rosalsky, Caroline English, Susie Lechtenberg, Merritt Jacob, and Christopher Wirth, with help from David Herman, Anna Hyatt, Rick Kwan, Daniel DeZula, and Paul Schneider. If you want more Freakonomics Radio, you can subscribe to our podcast on iTunes or go to Freakonomics.com, where you'll find lots of radio, a blog, the books, and more.

• 45:41Stephen J. Dubner?

  Freakonomics Radio is sponsored by EverPure. Is the value of AI not living up to the promise? The problem is probably your data, not your AI models. When it's scattered across different systems, getting your data AI-ready is a challenge. You keep your AI waiting, and everything slows down. EverPure unifies your data, so you can see it, understand it, and control it all from one simple place, and get it AI-ready fast. Unlock the true value of your AI at everpuredata.com.

• 46:14Stephen J. Dubner?

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• 46:58Stephen J. Dubner?

  So they are looking ahead and investing $80 billion in infrastructure upgrades and are committed to fueling growth in ways that benefit all customers so that reliable and affordable energy is accessible for generations to come. Go to southerncompany.com to learn more. Southern Company, building the future of energy.

• 47:22Speaker 09

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