A few days ago, a good friend of mine emailed me with a query on two things: (1) what to do with an old engagement ring, and (2) if he had an idea of a new market.
This is what he wrote me:
...apparently you typically get 10-25% the original price when you resell an engagement ring. So reselling it is like the worst thing you can do. And then you take your crumby resale value and put it towards a new ring.
So I got this idea. What if there was a site where guys like me who still have an old engagement ring can swap them with each other? So neither guy's girlfriend winds up getting a ring from his ex and he doesn't get screwed on resale value. It winds up just like getting a used, discounted ring which people do all the time and women never care about.
It's not about what I paid for the ring and making it back or what I would pay for a new ring because an engagement ring by nature has more perceived value than actual value. I'm more interested in the ability to simultaneously cut ties with a bad memory, create a new, positive meaning for someone else, and giving them the opportunity to do the same for you. There's something terribly empty about reselling the ring to a jeweler and buying a new one. It starts your new experience off with a bit of bitterness, a reminder of what you lost, instead of a feeling of helping someone in the same boat as you.
I understood his query, or, at least I thought I did. The intrinsic value my friend spoke of clouded my judgment.
I decided to get some professional help, so I wrote Tim Harford, and this is what Tim replied to me when I proposed the question to him:
I am not sure this solves the problem. Why not sell the ring on eBay? And if resold engagement rings sell for a cheap price, well, why not buy the replacement on eBay too? Not sure what the additional value of the exchange is.
If the exchange is valuable, it's a variant on the kidney exchange market set up by Al Roth and others; sometimes you can swap but not buy. But I am not convinced that the parallel is very strong.
I gave my friend Tim’s opinion, to which he agreed was the most sensible answer. He and I both admitted though, that the perceived intrinsic value of the ring clouded our judgments in terms of the proper course of action. The idea was that we could somehow reinforce another’s intrinsic values with their rings in the exchange.
However, when reading Tim’s response, the intrinsic value is essentially already there. You can only imagine that someone has had to go through something emotionally similar if they have to resell such a ring on eBay, as well. So, in the sense that the intrinsic value of the ring is there, the market that my friend spoke of (ex-engagement rings) is there too.