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Resources for Learning and Exploration - Student Papers
"Detecting Fraud Using Benford's Law " , J uly 2006.
Excerpt: Benford's Law, or the First Digit Law as it is
sometimes called, states that the first digits of many numbers
do not occur randomly and evenly throughout a dataset. Using intuitive
logic and the general laws of probability we would assume that
the probability of the first digit of a number being 4 and the
probability of it being 9 is the exact same with about a 0.111
chance. However, as Benford's Law would have it the probability
of the first digit being a 4 is 0.096 and the probability of it
being a 9 is 0.045(Nigrini). Why and how does this phenomenon
occur and how is this beneficial to us in detecting fraud? <download>
Jackie Lambert, "Data Mining Intro
for Students, July 2006.
Note about the author: Ms. Jackie Lambert is a student
in the International Baccalaureate Program at Henrico High School
in Richmond, VA. She will graduate in 2007.