Uses for Benford’s Law
Benford’s Law is widely used. Some of the applications are as follows:
Fraud Detection
Benford’s Law is widely used in fraud detection. As we all know Benford’s law curve is logarithmic. So fraudsters make use of arbitrary numbers to commit fraud. So if the leading digits of the numbers do not follow the above curve, we can conclude that there are chances that a fraud might have occurred.
Stock Prices Analysis
Benford’s Law is widely used by analysts to analyze stock market prices. It helps to check the authenticity of the stock market data. If there are some deviations then the analysts can look for the deviations and analyze accordingly.
Benford’s Law
Benford’s Law is one of the fundamental laws of mathematics that states, “In a large dataset, approximately 30% of numbers start with a 1 while less than 5% start with a 9.”
In this article, we have covered, Benford’s Law definition, formula, examples and others in detail.
Table of Content
- What is Benford’s Law?
- Benford’s Law Curve
- Uses for Benford’s Law
- Disadvantages of Benford’s Law
- Solved Problems on Benford’s Law
- FAQs on Benford’s Law