The Illusion of Scarcity

Economics 101 often emphasizes that many things in life -- from waiting in gas station queues to soaring international flight prices, or even the cost of tea in China -- boil down to the basic concept of supply and demand. In general, when supply is limited but demand is high, prices soar. It's no surprise, then, that some industries intentionally exaggerate the scarcity of a product to drive demand and inflate its value. However, it might surprise you to learn which products, items, and even intangible goods are less rare than we’ve been led to believe.

From gas to water and even chicken wings: Claims of their scarcity have been vastly overstated, according to many experts. At times, this confusion is strategically created to spark interest in buyers; at other times, it’s simply fueled by media exaggeration and the panic that follows.

Continue reading for a breakdown of 10 of the most well-known "fake scarcities."

10: Flu Vaccine

The Centers for Disease Control and Prevention recommends that everyone aged 6 months and older receive an annual flu shot, which might make it seem that the rush for vaccines could cause a shortage as flu season approaches [source: Reuters]. However, health authorities and vaccine producers have been well-prepared in recent years, even when the virus arrives earlier than expected [sources: Doyle, Pamer].

Vaccine manufacturers begin producing flu shots in August, long before the cold weather hits and the virus spreads. Most people get vaccinated in the fall, meaning that by the end of the flu season, fewer doses remain. If some pharmacies experience a shortage, others in the area are likely to still have stock. A government Web site can help you locate it. For the 2012-13 flu season, 145 million vaccines were produced, and by late January 2013, around 16 million doses remained in the U.S., which experts say is typical [sources: Doyle, Pamer].

9: Chicken Wings

Few things are as American as pairing football with chicken wings. But one thing that might be even more American is the media hype surrounding them. Every year around Super Bowl time, fans of the national pastime and lovers of deep-fried Buffalo, BBQ, or simply hot wings get caught up in a frenzy of giggling news reports about a supposed chicken wing 'shortage.' The catch? It's not true.

The yearly headlines warn that a surge in wing demand before the big game has drained the world's chicken supply and sent prices through the roof [source: Daneman]. In 2013, the scare originated from a report by the National Chicken Council (NCC), an actual organization, which claimed that wing prices would rise before Super Bowl Sunday. According to the council, drought conditions and ethanol production mandates led to an increase in corn and feed costs, which in turn made raising chickens more expensive [source: Tuttle].

What the council failed to clarify was that it was specifically talking about a potential rise in wholesale wing prices. It later added that because restaurants and grocery stores plan ahead for the event, any price hikes would not be passed on to consumers. And, tucked into the middle of the press release, the council assured that 'consumers shouldn’t worry about any shortage of wings on Super Bowl Sunday or in the near future' [source: Tuttle].

8: Mobile Data

No, the term 'spectrum' doesn’t refer to the iconic Philadelphia arena that once hosted the Flyers, 76ers, and superstars like Bruce Springsteen and Genesis. Today, it's commonly used to describe the radio frequency used to access the Internet wirelessly. As our growing demand for data intensifies, some believe that it is stretching the limited spectrum available, creating a so-called 'scarcity' [source: Reardon].

The CTIA-Wireless Association and various government officials have been raising concerns for some time. According to the industry group, wireless traffic surged by 104 percent from June 2011 to June 2012, with claims that more spectrum will be required to meet our insatiable need for things like checking sports scores, weather updates, and posting on Instagram while on the move [source: Farrar].

However, others argue that data traffic growth is actually slowing significantly. In the first half of 2012, wireless data traffic increased by only 21 percent, likely due to data caps imposed by major telecom companies, which led consumers to seek out Wi-Fi instead. Meanwhile, some watchdogs highlight that only about one-third of the spectrum available in the U.S. is currently in use [sources: Farrar, Reardon].

7: Disney Movies

Don't mind the mouse behind the curtain—he's simply running the hype machine.

"Masters of trademark and copyright, Disney excels at keeping its content under wraps—especially its own," the Wall Street Journal explains. The company regularly withdraws certain movie titles from the shelves and locks them in the so-called 'vault,' making them temporarily unavailable for purchase. But not before offering fans one final chance to grab these films, of course. Disney creates demand for these titles by generating uncertainty about when (or if) they'll ever return to the market [source: Felten].

As it turns out, the Disney 'vault' is as mythical as Alice's Wonderland. While the company’s online store offers 'Fantasia'-themed shirts, hats, cups, and ornaments, you won’t find the movie itself. However, head over to Amazon or other third-party retailers, and you can easily find this and other vault titles for sale [source: Felten].

6: Diamonds

If the TV commercials are to be believed, there can't possibly be a shortage of diamonds on the market, especially since every man and his dog who got engaged in the last decade 'went to Jared.' Despite this, diamonds have always been considered scarce, which is reflected in the hefty price tags they often carry.

The supposed scarcity of diamonds is a clever illusion crafted by one major gem merchant. Back in the 1880s, the De Beers diamond company, led by chairman Cecil Rhodes, acquired control over vast areas of South African diamond mines. This strategy later spread to other diamond-producing regions. De Beers, along with a few other companies, soon dominated the global diamond supply and, crucially, the prices attached to them [source: Zoellner].

These diamond moguls want consumers to believe that the stones are incredibly rare, making them more likely to spend a small fortune. The reality, however, is that massive stockpiles of diamonds are kept hidden away, deliberately removed from the market to drive prices up [source: Stossel].

5: Online Advertising Space

A quick look at the so-called spectrum "crises" makes it clear that people spend a lot of time online. They're also busy shopping, which makes businesses eager to advertise to these web users. Websites, eager to capitalize on this demand, increase their prices for prime ad spots. Popular platforms like Yahoo, MSN, and AOL boast that their ad space sells out months ahead, which allows them to charge premium rates for 24-hour ad placements [source: Angwin].

4: Oil

"Peak oil" is that old fear-mongering idea that the world is running out of oil. This notion has been around since the 1880s. Yet, more than 130 years later, global demand for oil continues to rise. In 2013, the Organization of the Petroleum Exporting Countries (OPEC) forecasted an increase of 840,000 barrels per day in global oil demand [sources: Rotman, Reuters].

The ongoing surge in global oil demand, primarily driven by China, has reignited concerns among peak oil theorists who fear that reserves could soon be exhausted. However, critics argue that the theory overlooks the potential for major advancements in oil production and the continued discovery of new resources. Meanwhile, new sources of oil are being found around the world, from the Brazilian coast to the Canadian oil sands. Even the United States is stepping up its efforts: According to OPEC, American oil production is expected to increase by 490,000 barrels per day, thanks to the North Dakota oil boom and expanded drilling in the Gulf of Mexico [sources: Rotman, Graeber].

3: Skilled Technical Workers

The economic downturns of recent years have exacerbated a so-called skills gap, where high-tech positions, which have replaced manual labor jobs in factories and elsewhere, remain unfilled due to a lack of qualified workers. This has been the narrative pushed by business and political leaders. The National Association of Manufacturers estimates that there are roughly 600,000 technical factory jobs open for individuals with the advanced skills to perform them [source: Davidson].

However, labor economists argue that the real issue is not a lack of skilled workers, but rather the low wages offered for these positions, which make them unattractive. In other words, manufacturers are seeking workers with the necessary education and technical skills but are unwilling to pay competitive wages compared to other industries. In some cases, the pay is only marginally higher than what one could earn at a fast food job. Even at the higher end, engineers and technical professionals are choosing more lucrative careers in fields like finance and medicine, according to experts [sources: Davidson, Barger].

2: Nurses

For quite a while, we’ve been hearing about a looming crisis in healthcare due to an alleged shortage of nurses. The growing elderly population combined with expanding healthcare access is expected to create an increased need for nurses. However, an unexpected twist during the recent recession was that many nurses who were set to retire chose to continue working [source: Kurtz].

While the nursing shortage narrative has worked out well for nursing schools — with enrollments in bachelor’s programs doubling over the past ten years — it hasn’t been so great for their graduates. Many of them are struggling to secure jobs. A 2011 survey from the National Student Nurses Association revealed that 36 percent of newly registered nurses were unemployed four months after graduation. In California, the number is even higher, with almost half (46 percent) of nursing graduates still seeking work 18 months later. Experts attribute this to hospitals and doctors seeking something these new graduates can’t provide: experience [source: Kurtz].

1: Water

Water shortages are a pressing issue in certain parts of the world, particularly in developing nations. Around 20% of the global population resides in areas where water is physically scarce, while an additional 25% lives in places lacking the necessary infrastructure to transport water from its source—such as rivers and aquifers—to the people who need it. In these regions, poor water quality, which leads to diseases like cholera, malaria, and typhoid fever, can be just as deadly as having no water at all. [source: World Health Organization].

However, the total amount of water on Earth has not diminished, and overall, we are not in danger of running out. The common belief that 97% of the planet's water is undrinkable due to its salt content is misleading. Many overlook the fact that oceans actually act as fresh water sources, as the sun, sea, and evaporation work together to create about 45,000 gallons (170,344 liters) of rainwater for every person on Earth. The real challenge lies in the fact that communities, farms, and reservoirs are often not located in areas where this water is easily accessible. [source: Fishman].