Q: If it's better to be frugal than thrifty, why do we call them thrift shops? Shouldn't we call them fruge shops?
A: The reason that it is "better" to be considered frugal than thrifty relates back to their relative etymologies. "Frugal" derives from the Latin word frugalis, which included connotations of fruit and profit. "Thrifty" derives from the Old Norse word "þrif," which includes the means of industry. In other words, frugal points a careful managing of surplus, and can even point towards further, more negative, terms of money-pinching, including that wonderful $5.00 word, parsimonious. Thrifty is not managing a surplus, but managing out of necessity. It conveys the idea (rightly or wrongly, mostly wrongly) that being so cheap with money may also mean that the tight spender is also cheap in terms of emotional depth and personal value. It carries, in other words, a sense of desperation.
"Thrift shop," on the other hand, has entered into the common parlance because a thrift shop takes that element of desperation and transfers it from the buyer to the seller. The design of a thrift shop is minimal, is kept deliberately minimal, in order to convince the buyer that the store needs them more desperately than the other way around. A shop based on frugality, on the other hand, maintains the sense of managing a surplus; such a shop can afford to wait for the "proper" customer to come along.
My answer here is one of the reasons why I'd make a poor stand-up comedian. One of the many, many reasons.