John Young posted:
He's Got Their Number: Scholar Uses Math to Foil Financial Fraud
By Lee Berton Mark Negrini, an assistant professor of accounting at St. Mary's University in Halifax, is trapping tax cheats, check forgers and embezzlers with an obscure theory known as Benford's Law. Formulated by physicist Frank Benford in 1938, the law lays out the statistical frequency with which the numbers 1 through 9 appear in any set of random numbers.
Mr. Negrini applies the law to the numbers on suspicious checks or tax returns. A series of legitimate check amounts or tax write-offs will be genuinely random, while those dreamed up by a human will not. If the numbers on the checks or tax returns do not obey Benford's Law, they can't be random, and "someone is taking the company to the cleaners," Mr. Negrini says.
I just looked @ the front of a M.O. computer catalog & the numerals in the prices are anything but random. A very heavy concentration of eights (8) & nines (9), apparently this company is more into $508.98 (color inkjet printer) & $38.98 (well known game s/w) than the old late night TV standby of "JUST $19.99!". Of course, this is because of excessively documented ad nauseum human psychological tendencies that salescritters, who set at least the lsd's of price, have been aware of for millenia. I'd bet, that 5(five), 8(eight), & 9(nine) are significantly more represented across the board in prices (& thus in amounts for checks & tax write offs) than than their random distribution by Benford's Law or more well known tests for randomness would suggest. Has Mr. Negrini factored this into his program? I guess the lesson is do a few pgp make__random's & convert a few of the hex numbers to dec digits for the lsd's the next time one does creative expense reporting. tjh