#### Vol. 12, No. 7, 2019

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Benford's law beyond independence: tracking Benford behavior in copula models

### Rebecca F. Durst and Steven J. Miller

Vol. 12 (2019), No. 7, 1193–1218
##### Abstract

Benford’s law describes a common phenomenon among many naturally occurring data sets and distributions in which the leading digits of the data are distributed with the probability of a first digit of $d$ base $B$ being ${log}_{B}\left(\left(d+1\right)∕d\right)$. As it often successfully detects fraud in medical trials, voting, science and finance, significant effort has been made to understand when and how distributions exhibit Benford behavior. Most of the previous work has been restricted to cases of independent variables, and little is known about situations involving dependence. We use copulas to investigate the Benford behavior of the product of $n$ dependent random variables. We develop a method for approximating the Benford behavior of a product of $n$ dependent random variables modeled by a copula distribution $C$ and quantify and bound a copula distribution’s distance from Benford behavior. We then investigate the Benford behavior of various copulas under varying dependence parameters and number of marginals. Our investigations show that the convergence to Benford behavior seen with independent random variables as the number of variables in the product increases is not necessarily preserved when the variables are dependent and modeled by a copula. Furthermore, there is strong indication that the preservation of Benford behavior of the product of dependent random variables may be linked more to the structure of the copula than to the Benford behavior of the marginal distributions.

##### Keywords
Benford's law, probability, theoretical statistics
##### Mathematical Subject Classification 2010
Primary: 11K99, 60E99