If you haven’t heard of this, it will BLOW YOUR MIND.
First, let’s consider something mundane: The revenue of every company in the S&P 500 in 2017.
NOPE.
In fact, over 30% of the revenue numbers will have a leading digit of 1, while 5% will have a leading digit of 9. More of the numbers will start with 1 than 2, 2 than 3, and so on to 9.
Start by counting from 1 to 9. By the time you hit the 9, the distribution of leading digits across all numbers counted is equal. There is one 1, one 2, etc. However, once you hit 10 things change...
See here: en.wikipedia.org/wiki/List_of_t…
Data from here: testingbenfordslaw.com/twitter-users-…
Because WHEN PEOPLE MANIPULATE DATA, IT IS POSSIBLE TO TELL. Benford’s law is one way to start digging.
BEWARE THOUGH: Benford’s law is not the be-all and end-all for fraud detection, but it can be helpful, read this: rss.onlinelibrary.wiley.com/doi/full/10.11…
If you are interested in learning more on this topic, check out my blog post here: ofdollarsanddata.com/fantastic-lies…