Loosely speaking, when economists talk about the "substitution effect," they are referring to the fact that as the price of one good or service rises relative to another, consumers will tend to favor the latter, cheaper option.

If, for example, people are genuinely indifferent to whether they eat chicken or beef for dinner, a rise in the price of steaks, for instance, may cause some to choose drumsticks instead. Of course, this is a simplistic example, because any number of other factors can also influence the decision.

As it happens, some have argued that the United States' primary gauge of inflation, the consumer price index, is distorted by simplistic assumptions about the substitution effect.

Apparently, if steak-fanciers start buying chop meat this month at a price not much different than before because ribeyes have suddenly become more expensive, government number-crunchers take that to mean that,prices have remained relatively stable, at least in this category.

Leaving that issue aside, many consumer product industry insiders and Wall Street analysts have long held that the substitution effect is muted or even nonexistent when comparisons involve no-name generics and the popular, brand-name favorites marketed by large, well known companies.

Recent evidence suggests that this relationship is no longer holding true in the current economic environment. As the Wall Street Journal reveals in "At the Supermarket Checkout, Frugality Trumps Brand Loyalty," severely constrained budgets are forcing a structural shift in consumer spending habits.

When Summer Mills visited her local CVS drugstore recently, to save a few dollars she bought the store-brand facial scrub rather than the Olay version she normally uses.

"I thought I'd be able to tell the difference, but I couldn't -- I looked at the ingredients and they seemed almost the same," says 30-year-old Ms. Mills, a stay-at-home mother of two in Ardmore, Okla. On her next shopping trip, "I'm going to buy the store-brand moisturizer and cleanser -- it's less money."

Many Americans are changing their everyday purchases and abandoning brand loyalty, prompted by the persistent financial pressure of rising food, gasoline and electricity prices. Over the past 24 months, consumer prices have risen 7.8% according to the U.S. Bureau of Labor Statistics. From coloring hair at home instead of at the salon to trying cheaper laundry detergents, new evidence indicates that Americans are modifying even minor household habits to save money.

Kimberly-Clark Corp. CEO Thomas Falk noted that sales of the company's potty-training pants, once one of the biggest sales-growth products in the baby aisle, have fallen off in recent months. "You're seeing consumers leaving children in diapers longer...the diaper is less expensive per piece than a training pant," he said in a recent conference call in which he announced a 9% decline in third-quarter earnings.

Shoppers are even buying toilet paper differently.