Or you/your wife could just find better friends that won't judge you for such petty crap. Believe it or not, materialist obsession with conspicuous consumption is not universal.
Maybe this type of signalling isn't universal but it definitely serves a (not-always-evil) purpose.
For example, maybe they have a great sense of humour, or give good advice, or they invite you to things you like the sound of, or you share a great many interests with them.
If they think failure to purchase a diamond makes you a lesser person in any way, I sincerely doubt either of those might still be true...
This is because, if someone is not comitted, it's easier to demonstrate commitment falsely to many people by purchasing large quantities of cheap jewelry. Buying over-priced items forces the person signalling committment to put their money where their mouth is.
Think of it as the cost of fake commitment; our culture of wedding-rings, etc, is an attempt to increase the cost of fake commitment.
There are an almost infinite number of healthier ways that we could signal commitment. There's no need for a middleperson, and there's no real value that the diamond industry is providing in exchange for their 'cut' of the money. Diamonds have always been relatively easily faked, and no one other than the recipient will likely be able to tell a fake diamond from a real one -- so they're not even particularly good public signifiers. A private gesture would work just as well.
Honestly, if the engagement process involved dropping a bundle of cash on a public sidewalk and lighting it on fire, even that would be a better system than diamonds.
If the whole benefit of this is that we're making it costly to get married, and thus costly to blithely propose to someone, then I dunno. Getting rid of money is not hard; it's very, very easy. We don't need a complicated, ethically challenged system for that.
On a technical level, you're probably right about diamonds. It's probably a legitimate signalling hack in the romantic sense to buy a zirconia and pass it off as a real diamond. This will probably be a short-term play if women start catching on.
I also disagree that a private gesture ever works as well as a public one, if that's the comparison. Public gestures signal commitment to a wider group, therefore increasing the cost of defection. Public commitments are one of the prime examples of costly signalling (as compared to private commitments) out of game theory. Not saying I'm a game theory authority, or that game theory is always right, but this is textbook.
I agree that burning a pile of cash is even better than giving diamonds in terms of signal-quality.
Seems to me that the global human cost is lower if you have middle-men involved. You have a similar signalling cost but humanity overall retains some value by paying the middle-men, whereas the burn-cash strategy leans 100% towards signalling at the cost of value retention.
Edit - potentially lower if you have middle-men involved.
What I meant with that is that diamonds are a bad public gesture, because no one other than your immediate partner will ever be able to evaluate the authenticity of the diamond. If you're going down the diamond route, you might as well do a private gesture because diamonds already can't be easily publicly verified. If you're concerned about being public, then skip the ring entirely and pay for your partner to go on an expensive trip, or donate money to get something named after them. These are gestures that a fraudster would be unable to easily replicate.
> Seems to me that the global human cost is lower if you have middle-men involved.
If your concern is that you don't want the money wasted, then at least donate it to a charity, or give it to a local business. Some of them would even be willing to officially recognize or publicly name something after your partner, which again would be good public signaling because it would be hard to fake.
The investment signaling theory of diamonds is that we've all decided that in order to efficiently signal, we're going to give money to someone we have no relationship with, who isn't providing a useful or unique service, who has a long history of unethical practices (even if they've cleaned up a bit recently), and who employs the majority of their workforce and conducts the majority of their investments outside of our communities.
If society was actually thinking about engagement from a purely rational signaling point-of-view, it wouldn't pick diamonds as the way to signal. But somehow the diamond industry convinced society as a whole that they were an essential part of the process. What I would contend is that I don't think there was anything rational about that advertising campaign; it preyed on people's emotions, their vanity, and their misconceptions about how the market worked. It's a prime example of an industry making a social system less efficient and more harmful than it otherwise would be in its natural state.
My point is that regardless of whether you think of a diamond as an investment, or as an inherently meaningful item, or as game-theory signaling device -- it's really bad at being all of those things. No matter what direction you come at it from, diamonds are a kind of crappy scam.