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The academic study of Dave Ramsey

Dave Ramsey

“Dave who?” was my first answer to the question, “What do you think of the financial advice of Dave Ramsey?” This was many years ago, but I was soon to learn that Ramsey is the host of a national radio show on personal finance with a huge audience.

He also has a rule-based and faith-based system for financial prosperity.

Over the years, I have developed two responses to the original question:

  1. As a volunteer financial counselor, I can tell you that Dave Ramsey’s materials are the best for people in financial trouble.
  2. As an academic economist, I have my reservations.

For several years now, my coauthor Scott Niederjohn and I have been working on a review of Ramsey’s system. That effort recently resulted in an article that we think is the first peer-reviewed study of Ramsey’s financial advice.

Peer review is a funny thing. It’s the most reliable system for getting accurate academic work published, and yet sometimes the back-and-forth with reviewers changes the tone of what you wanted to say. In this case, peer review made our article more accurate but also more critical and snarky.

Anyway, here’s a little news release on our article. Enjoy!


The first peer-reviewed study of talk show host Dave Ramsey’s financial advice has been published in the Journal of Economics and Finance Education.

“Dave Ramsey’s Personal Finance: A Primer and Critique” appears in the July 2021 issue of the journal. It was authored by the head of James Madison University’s economics department, William C. Wood, and the director of Concordia University’s center for economic education, M. Scott Niederjohn.

“When we began work on this project, we expected to see a lot published on Ramsey’s financial system because it is so widely taught and adopted,” Wood said. However, the two researchers found Ramsey had been neglected by economics and personal finance scholars.

Writing for an audience of economics and finance educators, Wood and Niederjohn show how Ramsey’s “Baby Steps” start with the fundamental assumption that people are not good at seeking their own best interests — the opposite of what is typically assumed in academic economics.

Ramsey’s rules-based approach often directly contradicts conventional instruction in personal finance, as the authors show in a table comparing the Ramsey Baby Steps with national standards in personal finance education.

After making these contrasts, the article outlines implications for educators. “Whether educators agree or disagree with his approach, they need to know what he is saying,” Wood and Niederjohn write.

Wood said he had mixed feelings in writing about Ramsey’s system. “As a volunteer counselor, I can tell you Dave Ramsey’s materials work,” he said. “But Dr. Niederjohn and I are academic economists – and from that standpoint we have some reservations.”

As an example, Wood talked about Ramsey’s observation that self-identified millionaires followed his strategies. “Many people did, but what about the people who tried and did not succeed, or those who became millionaires in other ways? The evidence falls far short of a fully controlled experiment.”

Still, Wood himself admits that his financial successes came from following advice similar to Ramsey’s. Wood, a fan of Ramsey’s talk show, says he has heard the host refer to “broke finance professors” who cannot manage the own finances well. “There was a time when I was the broke econ professor,” Wood said.

“I used to buy new cars and finance them. I once convinced my family to buy a rental property before we were ready.” Ramsey recommends paying cash for used cars and being debt-free before investing in rental property.

Wood said that his family overcame early mistakes and paid off their home mortgage early — “something my economics friends considered irrational.” Conventional personal finance would call for investing funds that otherwise would have been used to pay off the mortgage, while reaping the advantages of tax deductions and relatively lower interest rates.

Wood said he had followed a parallel “Dave-ish” strategy before coming across Ramsey’s work while getting ready to teach a personal finance short course.

“We don’t agree with everything Dave Ramsey has written and said,” Wood reported, “but on the basic emphasis of budgeting and avoiding debt, his advice can help a lot of people.”