The Applicability of Benford’s Law to the buying Behavior of Foreign Military Sales Customers
Defense Security Cooperation Agency
Florida A&M University
Global Journal of Business Research, Vol. 2, No. 2, pp. 77-85, 2008
The forces of natural law selection prompt animal species to make preference decisions to maximize their survival utility. Those species making decisions in this way survive, and those which do not tend towards extinction. This process appears to follow a decreasing marginal utility trend with a logarithmic probability distribution, which is identical to Benford’s Law. This suggests that Benford’s Law is a descriptive statistic of this natural selection process. Additionally, the customers of the Defense Security Cooperation Agency’s foreign military sales program presumably also attempt to optimize their survival utility, and exhibit purchasing patterns correlating strongly with Benford’s Law. The purpose of this paper is to examine how a mathematical phenomenon, Benford’s Law, may prove to be a useful means of understanding the buying behavior of DSCA’s foreign customers. This paper also suggests an informal proof of Benford’s Law.
JEL Classification: C44, M31
Date posted: February 19, 2010