Perhaps no concept in numismatics is more difficult to understand and interpret than "rarity." This point was hammered home in a recent discussion we had concerning setting up a new rarity scale for our CoinFacts site.
Most of the traditional rarity scales (such as Dr. Sheldon's long-established R-1 to R-8 scale outlined in his magnum opus Penny Whimsey) are absolute scales, with specific ranges for the quantity of known examples. To qualify for a rating of R-6 for example, there must be between 13 and 30 pieces known. The problem with this absolute approach, is it is only useful within narrow and specific segments of the market.
This weakness is apparent when looking a popular series such as Lincoln Cents. The popular and well-known rarity, the 1909-S VDB, has an estimated survival of approximately 50,000 pieces (about 10% of the original mintage). According to the Sheldon Scale, it would only qualify as an R-1 coin, (common), the same as a 1999-D, with a mintage of 6.3 billion! Similarly, the 1914-D, another popular key date, boasts an estimated survival of 120,000 pieces. Another "common" date? Clearly, the Sheldon Rarity scale is of little to no use when trying to evaluate Lincoln cents. It was designed for early large cent varieties, not modern series.
The famous 1909-S VDB Cent. Is this a rare coin?
But to be fair to Dr. Sheldon, any absolute rarity scale would suffer from the same problem because rarity is a relative concept, not an absolute one. The 1893-S Morgan Dollar is an extremely expensive coin in virtually any grade ($6,000 in VF, and $25,000 in AU). It is estimated that about 10,000 examples in all grades have survived. The 1842-O Half Dime on the other hand, has an estimated survival of perhaps 250 pieces or so in all grades (forty times as rare!) yet is valued at only about $300 in VF (only 5% of the 1893-S dollar). We could produce thousands of similar examples. So what is the point being made?
Absolute rarity has little to do with a coin's value. A coin's market value is a function of supply and demand. Limited supply with even more limited demand will result in a low value. A relatively high supply with an even higher demand will result in a high value.
Keep in mind that demand for better dates usually exists within a series. If many people are attempting to complete a series, then a better date will command a high price, even in low grade. Such coins as the 1916-D Mercury dime are a case in point. Conversely, if relatively few people are putting a complete date/MM set together (such as Liberty Half Eagles) even a date with prohibitively low mintage such as the 1872-P (mintage 1,660) is only marginally more valuable in low grade than a date with high mintage such as the 1881-P (mintage 5,708,000.)
So-called rare coins in popular series such as Lincoln Cents or Morgan dollars, may in reality, not be considered rare at all if similar quantities were available in a less popular series such as Seated Dimes or Half Dimes. Attempting to compare rarity between series has little meaning, for even the rarest coin in a popular series might be considered common in a more esoteric series. So remember that rarity in numismatics is relative, not absolute.