From: hardin@cyberspace.com
Date: Tue, 11 Jul 95 11:16:17 PDT
To: cypherpunks@toad.com
Subject: Re: Num Rat
Message-ID: <9507111813.AA0253@localhost>
MIME-Version: 1.0
Content-Type: text/plain



John Young posted:

>    He's Got Their Number: Scholar Uses Math to Foil Financial
>    Fraud
> 
>    By Lee Berton
>    Mark Negrini, an assistant professor of accounting at St.
>    Mary's University in Halifax, is trapping tax cheats, check
>    forgers and embezzlers with an obscure theory known as
>    Benford's Law. Formulated by physicist Frank Benford in
>    1938, the law lays out the statistical frequency with which
>    the numbers 1 through 9 appear in any set of random
>    numbers.
> 
>    Mr. Negrini applies the law to the numbers on suspicious
>    checks or tax returns. A series of legitimate check amounts
>    or tax write-offs will be genuinely random, while those
>    dreamed up by a human will not. If the numbers on the
>    checks or tax returns do not obey Benford's Law, they can't
>    be random, and "someone is taking the company to the
>    cleaners," Mr. Negrini says.

I just looked @ the front of a M.O. computer catalog & the numerals in the
prices are anything but random. A very heavy concentration of eights (8) &
nines (9), apparently this company is more into $508.98 (color inkjet printer)
& $38.98 (well known game s/w) than the old late night TV standby of
"JUST $19.99!". Of course, this is because of excessively documented
ad nauseum human psychological tendencies that salescritters, who set at
least the lsd's of price, have been aware of for millenia. I'd bet, that
5(five), 8(eight), & 9(nine) are significantly more represented across
the board in prices (& thus in amounts for checks & tax write offs) than
than their random distribution by Benford's Law or more well known tests
for randomness would suggest. Has Mr. Negrini factored this into his program?
I guess the lesson is do a few pgp make__random's & convert a few of the
hex numbers to dec digits for the lsd's the next time one does creative expense
reporting.

tjh