Is diamond a woman's best friend?

Wedding season is almost over. As an economist, I have a weird habit of breaking down cost of almost anything. Especially weddings. To me, wedding services are overpriced. A friend of mine has hired a wedding planner for $3000 (?!). To put the number in context, it is 10-month salary of an average Vietnamese. Other auxiliary services such as floral arrangement, venue booking, etc. might double given the wedding tag.


Why wedding is so expensive?


Vox tried to explained the staggering price by the two concepts: asymmetric information and "once in the life time" mentality. In customers side, the grooms and brides do not have a clue on the production cost of everything related to wedding: from the dress to the flowers. Wedding vendors, on the other hand, share little-to-nothing on production cost in the internet. If you google "wedding cost", there is a slim chance you find the service price and break-down costs in details. All you find is an endless creativity board of "perfect weddings". There are some budgets which were shared for good wedding jokes.


Source: Vietnamese couple shared his budget online in the internet here


To overcome asymmetric information, vendors can signal their quality through price. High price means top-notch quality. A dress from Calla Bridal, one of the Vietnamese top wedding tailor, is at least 100 mil VND (?!). A top-notch wedding planner can cost 75 mil VND (?!!)


This is when the second reason comes along. Wedding is not just another party. It is a life-time event. Couples want to utilize this event to signal two things: i) their love for each other; and ii) their social status. As per love, diamond giant De Beers had excellent ad campaigns to persuade man and woman that diamond resembles infinity love. Spending 2-month salary on a diamond ring can secure such love.

Source: Goodhouse keeping

As per social status, families would rather lose money than "lose face". This is another case of conspicuous consumption. Adam Ruins Everything explained the wedding tag through this perspective.


Yeah... I know wedding is expensive but I have my diamond ring, duh?


I will base this section on the 2015 study of Francis-Tan and Mialon. According to the authors, the wedding industry grows thanks to bridal magazines. Bride's, especially, promoted the necessity of a lavish wedding. During the period of 1959 - 1990s, wedding checklist has grown from 22 to 44 tasks for couples to complete.


Francis-Tan and Mialon found out "spending between $2,000 and $4,000 on an engagement ring is significantly associated with an increase in the hazard of divorce among the sample of men". To be specific, spending between "$2,000 and $4,000 on an engagement ring is associated with a 1.3 times greater hazard of divorce as compared with spending between $500 and $2,000".


With regards to wedding, "spending $1,000 or less on the wedding is significantly associated with a decrease in the hazard of divorce in the sample of all persons, and spending $20,000 or more on the wedding is associated with an increase in the hazard of divorce in the sample of women... Spending $20,000 or more is associated with 1.6 times the hazard of divorce in the sample of women".


This occurrence can be explained by financial distress a.k.a the wedding aftermath. Study shows spending "between $2,000 and $4,000 on the engagement ring is associated with two to three times the odds of reporting that debt". By constrast, "spending less than $1,000 on the wedding is associated with an 82% – 93% decrease in the odds of reporting wedding-related debt stress compared with spending between $5,000 and $10,000".


Turn out, neither expensive weddings nor diamond rings can secure an eternal love. It leads to eternal financial distress. The tales of fairy wedding are fabricated by the wedding industry. It is time for us to think twice and stop being FOMO.


I hope this post save you some money and love.


Until next time!


Reference:

  1. Tan, A. & Mialon, H. (2020) “A DIAMOND IS FOREVER” AND OTHER FAIRY TALES: THE RELATIONSHIP BETWEEN WEDDING EXPENSES AND MARRIAGE DURATION", https://doi.org/10.1111/ecin.12206

  2. Cameron, M. (2014), Why are weddings so expensive?, https://sex-drugs-economics.blogspot.com/2014/03/why-are-weddings-so-expensive.html

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