As the rich have gotten richer, the upper 1 percent have actually become more prudent in spending their money. And they're not likely to go back to the spendthrift ways of the '80s in the years ahead. Even those who insist on "the best" are trying hard to get it at the "best price." Therefore, it's becoming more and more common to see families with seven-figure incomes shopping at Costco, Sam's, and Tuesday Morning.

Let's examine the facts and implications:

In a January 5, 2003 New York Times article, Katherine Rosman describes what she calls the "new economy class": Millionaires, mostly under 50. They are rich by most of the world's standards, but just comfortable by their own. They've seen their net worth fall with the stock market's plunge in the past two years. So, although they continue to want the good life, the difference is that they are no longer willing to pay a premium for it.

According to Rosman, "everyone from Harry Winston, the legendary jeweler, to couturiers like Christian Dior, to the automotive, tourism and aircraft industries are catering to the new 'frugal elite.' To vie for the precious dollars spent on elite goods in a down economy, marketers are retooling their product lines: creating modest alternatives to traditional luxuries before their customers ask. Harry Winston has introduced a less expensive line with pieces starting at $6,500. Rather than pay $30,000 for a haute couture Christian Dior wedding dress, brides can now wear embroidered satin bridal pieces by Dior priced at $1,700 to $13,000. And instead of paying all those first-class fares, moguls can buy their own Eclipse 500 jet for $850,000 or a ‘fractional ownership’ for even less."

Rosman identifies the members of the "frugal elite" as people in their 30s to early 50s, with a net worth in the range of $3 million to $15 million. They built their wealth by starting their own businesses or by leading midsize companies, so they already know how to stretch dollars to the get the maximum returns. As a result, they don't derive any sense of status or prestige from overpaying for a luxury product or service that they could buy for less.

This attitude is supported by a new study that reveals that three out of four wealthy shoppers rate "good value for the money" higher than "prestige" when they make a purchase decision. Compared to the 1980s, when the...