The diamond-wafer paradox: a modern mystery

There is a paradoxical connection between economic growth and old electronic gadgets. It is paradoxical because wealth is usually associated with accumulating durable goods, not turning them into paper weights in an attic. This is called diamond-wafer paradox. Specifically, in growing modern economies, goods embedded with silicon wafers lose their value much faster than other durable goods or jewelry, such as diamonds. We explain this mystery.