Well since I'm not really a hippie yet, I just say: I'm not a Hippie; I'm just into the life-style. Or I just say I'm a Phishhead and they go: "Huh?"
Say, no actually, I'm a Katie. (of course you use your own name) But if they say it in a negitive way, and do not shut up, it's time for "Would a hippy do this?" and kick 'em in the balls.
i think the problem is that people outside the culture have a different construct of it, than those who are actively involved in it. a lot of people have negative or detrimental stereotypes of hippies... such as drug use, promiscuity, dirtiness etc. those are obvious ones. i'm sure you can think of a bunch more. when i went in to sign the lease for my current apartment, my landlord called me a hippie. i didn't take it as a compliment, because i figured she had a negative connotation of it. i didn't want her to second guess me as a tenent, and worry that i would forget to fully extinguish a joint and burn down the whole building, or move out and leave it smelling like cat-piss. another general stereotype is that hippies are unemployed or sell drugs. i don't want her to think that i can't pay rent, or that i'm paying rent with drug money. when someone who doesn't know you calls you a hippie, they're not complimenting you on your free spirit, because they just see you fulfilling a stereotype.