Things You Should Know

2011

Do you know what Benford's law is, and how it is used to catch you if try to cheat on your taxes? It is not a law created by government, but a mathematical law. It is also called the first-digit law, and it's one of the things you should know if you ever think you are going to fudge the numbers on tax form or anywhere else.

That and some other things you should know are the topic of this page. Let's get started with a look at...

Purpose of the Polygraph

The examiners who make a living giving polygraph or "lie detector" tests will not admit it, but often the purpose of administering the exam is simply to intimidate the subject in the hope of getting a confession. In this the process can be somewhat effective. Apart from this the technology is considered by many scientists to be less-than-effective, to say the least. In fact it simply isn't considered science by many who look into how the machine supposedly works.

It is very risky to consent to a polygraph examination, even if you are entirely innocent of any crime. Not only are false positives too common, but the common result of "inconclusive" can leave a cloud of suspicion hanging over you. If you think there is any chance you'll be asked to take a polygraph exam, be sure to read the e-book "How to Beat a Lie Detector Test," which comes with the Secrets Package.

Marketing Tricks Used on You

Companies are using subtle tricks to get you to buy their goods. Yes, they have always done so, but now their marketing techniques are getting more sophisticated and harder to spot. For example, according to a recent report in the publication Bottom Line;

"Nearly 35% of brands now are using nostalgia in their ad campaigns... Mountain Dew, Doritos and Pepsi are among the products currently available in packaging designed to look like the packaging of decades ago... People over age 50 are particularly likely to be hit with nostalgic sales pitches—the older we get, the more intense our longing becomes for the past."

Picking the right words is another way to subliminally influence you. A few weeks ago we were shopping for a cheap bookcase for our office, and the sales person immediately corrected my word "cheap" with, "The more economical ones are over there." Perhaps some of the most common words used to sell now are "invest" and "investment." The words "cost," "purchase," or "spend" are reminders that you are buying something. Of course, no matter how many times a salesman calls it an investment, a car or large screen television or boat is not an investment. It is losing value by the time you get it out of the store or off the showroom floor.

Getting even more subtle, many supermarkets purposely put their entrances on the right side of the building now, in order to get you moving counterclockwise through the store. This is because research shows that you'll spend more going in that direction. It is suspected that this is due to the fact that most people are right-handed, making it more comfortable to take things off the shelves when moving counterclockwise.

Math and Crime Detection

This is an explanation of Benford's law from Wikipedia:

Benford's law, also called the first-digit law, states that in lists of numbers from many (but not all) real-life sources of data, the leading digit is distributed in a specific, non-uniform way. According to this law, the first digit is 1 about 30% of the time, and larger digits occur as the leading digit with lower and lower frequency, to the point where 9 as a first digit occurs less than 5% of the time. This distribution of first digits is the same as the widths of gridlines on the logarithmic scale. Benford's law also gives the expected distribution for digits beyond the first, which approach a uniform distribution as the digit place goes to the right.

This result has been found to apply to a wide variety of data sets, including electricity bills, street addresses, stock prices, population numbers, death rates, lengths of rivers, physical and mathematical constants, and processes described by power laws (which are very common in nature). It tends to be most accurate when values are distributed across multiple orders of magnitude.

Now, that may seem confusing. You might even wonder why you might need to know about it in the first place. The necessity comes with how this obscure mathematical law can be used to catch fudging of numbers. For example, when people file false or less-than-truthful tax returns, the numbers they make up are usually random, with as many starting with the digit "9" as "1" or any other digit. The IRS has a program that can quickly run through returns and spot those that have this unnatural randomness. In other words, those that don't comply with Benford's law (those that don't have more ones and twos than eights and nines, for example), are flagged for further review. Gotcha!

In theory anyplace where the numbers are fudged an analysis could identify the paperwork as "probably forged." This can be used to catch accounting fraud, to identify census workers who are filling in form rather than doing actual interviews, and in many other contexts.

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