Benford's Law--Proving Fraud

 

Benford’s Law explained

Math is scary for most people – we get that – so here’s the simplest explanation we can muster. Benford’s Law states that in naturally occurring numbers of a sufficient size (so anything from the population in a city to how many blades of grass in a person’s yard) the first digit of that number (the leftmost digit) is statistically more likely to be a lower number. For example, the digit 1 has a 30% chance of being the first digit in a number.

This means that the likelihood of a number such as 8 or 9 being the starting digit in a number is less likely, statistically speaking. In fact, 9 only has about a 5% chance of being a starting digit.

One might easily assume each digit has an equal chance at “randomly” being the first digit, but this isn’t the case. These aren’t randomly generated numbers, they’re the counts of things, and when you count you start with lower numbers and work your way up – however when you run out of things to count, then you stop, so it stands to reason that you may not make it to 9,000 as often as you do 1,000.