Day 28 ยท Jan 28

Benford's Law

In 1881, astronomer Simon Newcomb noticed that the first pages of logarithm tables were much more worn than later pages. This led to Benford's Law: in many naturally occurring data sets, 1 appears as the leading digit about 30% of the time, 2 about 17%, and 9 only about 5%. This applies to populations, river lengths, physical constants, and stock prices โ€” any data spanning several orders of magnitude. It is now used by tax authorities worldwide to detect fraudulent numbers, because people inventing figures tend to distribute leading digits more evenly than nature does.

If someone makes up a list of fake financial figures, why might those numbers not follow Benford's Law?

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