This morning I participated in a Google hangout organized by the Huffington Post, along with Mike Huemer and some other people. The topic was engagement rings, inspired by a recent blog post on the subject.
The author of the post repeated the standard story according to which diamonds became popular for engagement rings as a result of an advertising campaign by the N.W. Ayer advertising company on behalf of De Beers. Pretty clearly the author had not read the classic article on the subject, "Rings and Promises" by Margaret Brinig, which offers a more interesting explanation of why and when the giving of an expensive engagement ring became a common custom.
Her explanation starts with the fact that pre-marital sex is not a new invention. In the early 20th century, a common pattern was for engaged couples to have sex with the understanding that if the woman got pregnant they would get married; evidence from several late 19th century European cities suggests that about a third of brides were pregnant. One problem was the risk of that the man, having gotten the sex, would dump his fiancee instead of marrying her. One solution to that, in U.S. law, was the tort action for breach of promise to marry. In a society where marriage was the main career open to women and the fact that a woman was known not to be a virgin substantially reduced her marriage prospects, seduction could impose substantial costs and result in a substantial damage payment.
Starting in 1935 in Indiana, U.S. states started altering their laws to abolish the action for breach of promise. Women responded, by Brinig's account, by requiring a down payment from their fiancees in the form of an expensive ring—which forfeited if the fiancee terminated the engagement. Think of it as a performance bond.
Brinig looked at data on diamond imports and concluded that the demand for diamonds started to rise about 1935, four years before the Ayer marketing campaign that is usually given credit for creating the demand for engagement rings. The evidence also suggested that the custom began declining once premarital sex became widely accepted, largely eliminating the problem it was designed to solve. Since 1980, by her account, engagement rings have never amounted to as much as 20% of all diamond sales.
From which I conclude that the Ayer agency was indeed good at marketing—not necessarily at marketing diamonds, but at least at marketing itself, spreading a story that gave it credit for a stunning effect that began four years before its supposed cause.