Benfords Law and tax dept - Printable Version

Benfords Law and tax dept - Printable Version

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Benfords Law and tax dept - vk6ti - 01-21-2015 08:24 AM

Hi Folks,
Many of you would know about Benfords Law, but I thought I may throw this one out there as an anecdote for the passing forum reader, in case they haven't

Frank Benford discovered that out of all random numbers 0 to 9, that one number shows up more frequently than others, and that is the number 1. Other numbers follow suit and do form some sort of plot or curve. ( he noticed this when compiling random numbers from Log tables that the sections starting with 1, was more populated than others, as they were the most used and dirty)
and came up with the necessary mathematics to prove it, hence Benfords law.
now
In step your local Tax Department, and review your tax return,
they break all your figures into single integers from 0 to 9 and tally them up with something called a computer, and compare the results to the typical curve,
in other words, if the number 1 is not the most frequent number, then is flags the system and it's an AUDIT prompt. Most violators who have "fiddled" the books, have been caught out by this method.

I may have thought all numbers were equal but some numbers may be more equal than others :-) ( not my line )

Have a nice day
Ray

RE: Benfords Law and tax dept - Thomas Klemm - 01-24-2015 01:09 PM

This is a visual proof of Benford's Law:
[Image: benfords_law.jpg]

Cheers
Thomas

RE: Benfords Law and tax dept - Massimo Gnerucci - 01-24-2015 04:22 PM

Nice proof! :)

RE: Benfords Law and tax dept - Joe Horn - 01-25-2015 01:39 AM

(01-24-2015 01:09 PM)Thomas Klemm Wrote: This is a visual proof of Benford's Law...

Excellent example!

The following is not as dramatic, but FWIW it's on an HP 49G calculator:

[Image: FHBkeys.jpg]