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Mark Nigrini to Talk on Benford’s Law

Mark Nigrini, Professor of Accounting & Information Systems at the TCNJ’s School of Business, will give a talk on Benford’s Law on Wednesday, February 1, at 12:00 pm. Afterwards faculty will be taking him to lunch at the 1855 Room.

Abstract: In the 1930s, a physicist named Frank Benford discovered that there were predictable patterns to the digits in lists of numbers.  His results showed that the digits were not expected to be equally likely in tabulated data.  The digit 1 is expected to occur about six times more often as a first digit than the digit 9.  Benford’s Law gives us the expected frequencies for the digits in the first, second, and third positions, and even for digit combinations (such as 64).  The first real-world applications of Benford’s Law were by auditors looking at corporate data and trying to understand why there were some deviations from the Benford’s Law patterns.

The talk on Benford’s Law will cover:

  • A discussion of Benford’s original paper and an explanation of what Benford’s Law is and why we have these skewed digit patterns occurring.
  • Examples of some authentic data sets that followed Benford’s Law and some fraudulent data sets that didn’t follow Benford’s Law.
  • Some fun examples such as my analysis of the tax returns of former President Clinton, and the published numbers of Enron.
  • Applications of Benford’s Law to earth science data (streamflows and seismic  signals).
  • An interesting review of my recent work looking at the numbers in the Madoff Ponzi scheme.
  • Some curiosities, such as the link between Benford’s Law and the code in the Da Vinci Code.
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