I'm not an expert on the topic, but I believe they are different - and maybe it can vary by context.  For example if a new technology comes about that automates a manufacturing process it can substitute what the worker used to do, the worker can be displaced to another type of work.  Substitute, in my view, replaces one thing with another, where displacement can move something (or someone in my example above) from one place to another. 

Thanks a lot Adriana for the opinion shared. Your point is well noted and very much appreciated. 

I will follow up with the context of Adriana in an attempt to avoid a theoretical exposition in my contribution. Substitutes like automation and man-power are used to achieve the same objective. They man displace each other depending on the importance. However displacement is not limited to substitutes. Lets say for a basket of goods, a price hike can displace a good from the basket without necessarily having a replacement/substitute.

On the other hand the introduction of say a better package for potato chip can cause a consumer to substitute for an existing item in that basket.

Oh ok, great. Thanks so much Alex for the opinion shared. Hope you are good? Your point is well noted and very much appreciated.

David,

Could you give us some information on the specific context in which you are looking or wabt to look at substitution and displacement? The other answers you've received are all useful, but I'd just like to know exactly what you are investigating right now.

Chris Bryant

Hi Christopher, 

I recently came across a document on food consumption which classified the replacement of rice by other food items during increased price of rice as substitution. In other papers, this is referred to as displacement (which I agree with, because rice to me has no true substitute unlike cocoa and coffee, cassava and yam, plantain and cocoyam, etc.). So I posed this question in other to get expert opinions on the difference between these two terms.

I see these terms used primmarily in labor economics.  I've attached an old report that defines the difference between displacement and substition effects.  Essentially, displacement refers to negative externalities where one thing replaces another (e.g., Netflix displaced (replaced) Blockbuster video stores. 

Substitution happens within a process (e.g., substituting capital for labor - used to  use people to people to stomp the grapes to make wine but now we have machines that do it.

Here are the definitions from the paper I  found that is attached.

Displacement: Displacement refers to any changes in employment elsewhere in the economy, in addition to tReplacement: Negative displacement or “crowding in” of jobs as a consequence of active labour market policies. Replacement occurs when the net number of jobs created as a consequence of the active labour market policy exceeds the number of jobs directly created.

Replacement: Negative displacement or “crowding in” of jobs as a consequence of active labour market policies. Replacement occurs when the net number of jobs created as a consequence of the active labour market policy exceeds the number of jobs directly created.

Substitution: A term for displacement within a firm which hires workers from an active labour market policy. These workers may be substituted by firing workers already in the firm or giving them fewer hours of work than otherwise. Also described as “intra-firm” displacement in this study.

Interesting!!!.Thanks so much Brian for this. Your suggestions are well noted and very much appreciated. Thanks as well for the link. Am so grateful