Abstract
Benford’s law is often used to support critical decisions related to data quality or the presence of data manipulations or even fraud in large datasets. However, many authors argue that conventional statistical tests will reject the null of data “Benford-ness” if applied in samples of the typical size in this kind of applications, even in the presence of tiny and practically unimportant deviations from Benford’s law. Therefore, they suggest using alternative criteria that, however, lack solid statistical foundations. This paper contributes to the debate on the “large n” (or “excess power”) problem in the context of Benford’s law testing. This issue is discussed in relation with the notion of severity testing for goodness-of-fit tests, with a specific focus on tests for conformity with Benford’s law. To do so, we also derive the asymptotic distribution of the mean absolute deviation (MAD) statistic as well as an asymptotic standard normal test. Finally, the severity testing principle is applied to six controversial large datasets to assess their “Benford-ness”.
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The data used in the paper are publicly available at https://web.williams.edu/Mathematics/sjmiller/public_html/benfordresources/.
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Acknowledgements
We would like to express our gratitude to Aris Spanos for his comments and suggestions on an early draft of this paper. Comments from Marcel Ausloos and two anonymous referees are gratefully acknowledged. We owe a special thank to Alex Kossovsky for having made public his data. All computations have been carried out using R 4.1.2 (R Development Core Team 2021): graphs greatly benefited from package “ggplot2” (Wickham 2016).
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Cerqueti, R., Lupi, C. Severe testing of Benford’s law. TEST 32, 677–694 (2023). https://doi.org/10.1007/s11749-023-00848-z
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DOI: https://doi.org/10.1007/s11749-023-00848-z