Benford's Law: The Strange Pattern That Catches Financial Fraudsters
An interactive explorer for Benford's Law across real datasets
I explore Benford's Law, a counterintuitive rule where the digit 1 appears as a leading number 30% of the time in real-world data. From Simon Newcomb's worn logarithm tables to Frank Benford's systematic study, this law spans everything from river lengths to the Fibonacci sequence. I explain the math behind scale invariance and demonstrate how forensic accountants use these patterns to detect financial fraud by spotting human-invented numbers.
The instinctive answer is one in nine — roughly 11%. It is wrong. Spectacularly, verifiably, universally wrong.
- jmpman
I'd recommend allowing 2 digit exploration. I've used it in the past when analyzing hard drive failure logical block addresses.
- yellow_postit
Neat! Benford’s Law was the first topic I dove into in undergrad math that got a minor publication. Given how well known it is for forensic accounting I’ve always wanted to look into convictions and see if the “average” fraudster has wised up and produces more realistic distributions.
- jboggan
I once did an application of Benford's Law to USDT transactions between crypto exchanges, which seemed to indicate some exchanges had mostly "organic" transactions and a handful of exchanges seemed to have heavy transaction volume of seemingly-random but not really random amounts, indicating some level of wash trading on those exchanges.