Dr. Theodore P. Hill asks his mathematics students at the Georgia Institute of
Technology to go home and either flip a coin 200 times and record the results,
or merely pretend to flip a coin and fake 200 results. The following day he runs
his eye over the homework data, and to the students’ amazement, he easily
fingers nearly all those who faked their tosses.
"The truth is," he said in an interview, "most people don’t know the real
odds of such an exercise, so they can’t fake data convincingly."
There is more to this than a classroom trick.
Dr. Hill is one of a growing number of statisticians, accountants and
mathematicians who are convinced that an astonishing mathematical theorem known
as Benford’s Law is a powerful and relatively simple tool for pointing suspicion
at frauds, embezzlers, tax evaders, sloppy accountants and even computer bugs.
The income tax agencies of several nations and several states, including
California, are using detection software based on Benford’s Law, as are a score
of large companies and accounting businesses.
Benford’s Law is named for the late Dr. Frank Benford, a physicist at the
General Electric Company. In 1938 he noticed that pages of logarithms
corresponding to numbers starting with the numeral 1 were much dirtier and more
worn than other pages.
By Malcolm W. Browne