csallen, thank you for thinking of making a list! I do have one or two more reasons to add to your list.

1. Cognitive dissonance reduction: he spent so much, so to avoid cognitive dissonance he's going to tell himself she's worth it. Helps keep marriages together. It is the same reason that hazing ritual happen in college and why secret societies have all sorts of strange initiation rituals, often hazardous or difficult. - Easy way to test this would be RQ: Do couples with relatively more expensive wedding rings for their income level(s) stay together longer than those who spend less on their wedding ring (controlling for other initial ritual costs like the wedding, although I suspect similar effects and interactions there).

2. Symbolic Interactionism This suggests that the initiation rites are there precisely to bind people together socially. It's a social-level theory explanation for all of the rites of passage rituals which are common in mating-couple pairing cultures in humans (and probably other primates, for that matter). A big token like this is a constant reminder of the commitment, and the meaning ascribed to this again helps with the ongoing project. If course this is entirely consistent with the marketing phenomenon, as it's more of an anthropological descriptive approach.

3. and oh... Shiny!

In graduate school, I took a class on evolutionary biology. One of the principles put forth was that women (think cave women) evolved to focus on seeking a mate that provided time and resources because women are more focused on the long-term reproduction strategy of investing in their offspring and want a mate to help maximize their success (i.e. that offspring surviving to reproduce). Both men and women were shown to engage in both short and long term reproduction strategies of sorts. Men sleeping around (short term) and supporting a child (long term). Women supporting a child with a mate's help (long term) and sneaking out on mate to have sex with genetically superior mate (short term). One of the supporting studies showed that in a list of things that would most anger a man or women relative to their mate, men rated sexual infidelity as number one (this is in part because men have paternal uncertainty and their worst outcome is investing in the long term strategy of raising another male's child). Women listed sexual infidelity as somewhere in the top few, but number one was their mate spending time/money/resources on another woman. For example, imagining their guy taking another woman out to dinner, spending time and thought on her, buying her a gift, etc. upset them more than the thought of him simply have sex with a women he wasn't otherwise invested in. Within this theory, an expensive diamond communicates that the male is making a large investment and communicates to other women that the woman with the diamond is worthy of that large investment. In real life, women of course range from "don't care or think that way" or "achieve that validation through non-material means" to "totally obsessed with sucking material goods and services from a man and showing that off to other people (mostly women). It was an interesting course and study.

An anecdotal data point: a friend used to work with a man who had married right out of high school, as had most of his classmates. At that point, probably 15 or 20 years out, this marriage was one of the few still intact. The man's observation was that in this group, the length of marriage was inversely proportional to the cost of the wedding.

Another anecdotal data point: When I married, I was working as a low-level reporter for near minimum wage. We married at a city courthouse and had a reception in the living room with my housemates who happened to be home at the time. I didn't buy a rock of any sort, though I gave her a plain gold wedding band I got from an estate sale. She gave me one she bought for $70 at a jewelry store.

That happened thirty years ago and we are still happily married with three kids, two of them in college right now and one in high school.

I think your second point is the most salient.

Advertising does one thing, and one thing only: create symbolic associations. (Well, I guess web ads are a departure, since the goal is a click).

What does Coke's advertising budget actually pay for? Images of people having fun and drinking Coke, which are then distributed through every media known to man. Three billion just for Coke = fun, popular. Think about that for a minute, and you'll recognize it's almost impossible to comprehend how intimate symbols really are, how they turn something intangible into something real that you can buy.

Now let's look at the diamond. In my opinion there is only one association that actually drives the purchase. Diamond = marriage. And not just marriage. The loving side of marriage, the tender and personal one as opposed to the banal legal one symbolized by a certificate or the familial one symbolized by the ceremony.

You can come up with a story as to why you don't have one, but there always must be a story. The diamond needs no story, because it's already a symbol. I'd love to see some examples of the early advertising campaign the article discusses.

Does "I'm not stupid enough to pay insane margins on a worthlessly common piece of rock." count as a story? It sounds more like a statement of fact to me.

Another way of thinking about it is the age old saying:

'Blood is thicker than water' when referring to family over people you encounter.

Beyond the shared experiences and the irrational bond (I use the phrase as devil's advocate whilst being happily irrationally bonded with my family), there's not a lot to prescribing value to familial relationships over other ones.

We prescribe irrational value to diamonds, because offering a big rock to a bride in front of our family imbues value beyond the intrinsic worth of the rock.

All good points. I think the real takeaway here though is if the price of a diamond really floated to its fair value, we'd be buying rings with something else on them. Which satisfies most of your list, but in addition, it would be more rational because what you buy could actually be justified as some sort of investment and not merely burning your money in essentially a grand century long con job.

Imagine instead buying a plastic ring for your beloved which would have engraved the account number and sum total of your engagement 401k you bought for the love of your life.