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Example 177


Example 177: Statistics can be used to detect fraud.  There is a pattern that turns up when observing the leading digit in real data (as opposed to fake data like you might find in falsified financial records).  That pattern is expressed by Benford’s law.  The table below lists the percentages for leading digits from Benford’s Law that we would expected to observe.  It also list the number of leading digits actually observed on a batch of 784 checks that are believed to be fraudulent.


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