Benford's Law as an Indicator of Fraud in Economics
AbstractContrary to intuition, first digits of randomly selected data are not uniformly distributed but follow a logarithmically declining pattern, known as Benford's law. This law is increasingly used as a 'doping check' for detecting fraudulent data in business and administration. Benford's law also applies to regression coefficients and standard errors in empirical economics. This article reviews Benford's law and examines its potential as an indicator of fraud in economic research. Evidence from a sample of recently published articles shows that a surprisingly large proportion of first digits, but not of second digits, contradicts Benford's law. Copyright 2009 The Author. Journal Compilation Verein für Socialpolitik and Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Verein für Socialpolitik in its journal German Economic Review.
Volume (Year): 10 (2009)
Issue (Month): (08)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- How an arcane statistical law could have prevented the Greek disaster
by mueller2 in Economics Intelligence on 2011-07-28 07:37:06
- Benford's Law: using stats to bust an entire nation for naughtiness
by Ben Goldacre in Bad Science on 2011-09-23 16:30:00
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"Benford’s Law as an Instrument for Fraud Detection in Surveys Using the Data of the Socio-Economic Panel (SOEP),"
Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik),
Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 231(5-6), pages 685-718, November.
- Jörg-Peter Schräpler, 2010. "Benford's Law As an Instrument for Fraud Detection in Surveys Using the Data of the Socio-Economic Panel (SOEP)," SOEPpapers on Multidisciplinary Panel Data Research 273, DIW Berlin, The German Socio-Economic Panel (SOEP).
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