Reuters Money

With Independence Day approaching, merchants will be looking to 18-24 year olds to light up the holiday.

According to a new survey from Visa, the sought after demographic will spend an average of $379 on fireworks, entertainment, food, beverages and other celebratory items related to the Fourth of July holiday, compared to $218 for 35-49 year olds, and $155 for 50-64 year olds.

Evidence suggests the summer spending spree isn’t just a blip. The latest College Explorer Study from Alloy Media + Marketing indicates that college students shell out an average of $361 a month on discretionary purchases and have been increasing such spending since the recession began in 2008. “Clearly, these youthful consumers are not cutting back deeply, despite the continuation of a challenged economy,” concludes a press release on the findings.

The big question is where all this money is coming from. Many young adults are still in school. If they’re working, it’s likely they aren’t making nearly enough to justify blowing almost $400 in a single day. Another factor that should rein in spending power is an unemployment rate of 17.3 percent for those under age 25, by far the highest of any age group.

Then there’s all that debt baggage that should be miring them down. Students who take out loans to attend school owe an average of $24,000 by the time they graduate, according to the Project on Student Debt, and possibly thousands more in credit card debt.

New research may shed some light on why, despite these burdens, late teens and twentysomethings aren’t afraid to belly up to the cash register and often incur debt to do it.

According to a recently published study from Ohio State University conducted on behalf of the U.S. Bureau of Labor Statistics, young adults age 18-27 don’t view debt as a source of stress or a potential burden. In fact, researchers found that higher levels of credit card and college loan actually boost self-esteem and feelings of empowerment.

“Young people seem to view debt mostly in just positive terms and as a tool for achieving what they want, such as a college education,” says Rachel Dwyer, assistant professor of sociology at Ohio State and the study’s lead author. “They typically don’t consider that it can also be a potential burden as well.”

The study looked separately at loans taken out to pay for college, and total credit card debt. The researchers thought educational debt might be seen as a positive because it is an investment in the future, while credit card debt might be viewed more negatively. Surprisingly, though, they found that both kinds of debt had positive effects of increased self-esteem and what Dwyer calls a “sense of mastery.”

Although some young people may be using credit cards to help finance their college education it’s likely that many also use them for non-essential discretionary items. Purchasers may feel good about their debt because it allows them to buy the things they want without having to suffer delayed gratification, says Dwyer.

Unbridled optimism may also play a role in spending decisions. Studies show that many college students are excessively optimistic about their earning potential once they graduate, and they are often uneducated about the potential negative effect paying off large loans can have.

That glowing vision of the future extends to their overall outlook for the economy, according to the College Explorer Study. When asked their opinion about the future of the nation’s economy, 42 percent of students stated they feel the economy would improve in the coming year, compared to 31 percent of those age 35 and older.

Perhaps the most powerful influence on young adult spending habits is the pervasive and unrelenting encouragement to sign up for plastic. Dwyer says that despite legislation designed to curb credit card marketing to college students, she still sees credit card companies setting up shop on city sidewalks near the school on move-in day. “These young adults are coming of age in a time of unprecedented access to credit. That’s something that previous generations didn’t have to deal with.”

The good news about this credit-fueled indulgence is that it may help lift the country out of a crippling recession, at least in the short-term. The bad news is that as certainly as exploding fireworks illuminate the sky, the bills will eventually come due for many kids who can’t afford to pay them.