Detecting Problems in Military Expenditure Data Using Digital Analysis

Abstract

The UN asks governments to report key figures of their annual military budgets with the aim of creating trust among member states. This goal can only be achieved if the data reported is accurate. However, although there are many reasons for governments to falsify data, the UN does not check for manipulation. In this paper, we apply Benford’s law to the military expenditure data of 27 states taken from the UN register. Our analysis of the first digits shows that the states with the greatest deviations from the expected Benford distribution and therefore the lowest data quality are the USA and the UK.

Keywords:

• Benford’s law
• Military expenditure data
• Digital analysis
• Forensic accounting

JEL Codes:

• C16
• F53
• M42

ACKNOWLEDGEMENTS

The useful comments and constructive suggestions by an anonymous referee are gratefully acknowledged. The usual disclaimer applies.

Notes

1 Cf. United Nations Office for Disarmament Affairs (2011a, 1).

2 Cf. United Nations Office for Disarmament Affairs (2011b, 1); United Nations Office for Disarmament Affairs (2010, 1).

3 Cf. United Nations Office for Disarmament Affairs (2010, 3).

4 Cf. Newcomb (1881, 39–40); Benford (1938, 551); Raimi (1976)

5 Cf. United Nations Office for Disarmament Affairs (2012a).

6 See also Ley and Varian (1994) and De Ceuster, Dhaene and Schatteman (1998).

7 Cf. Newcomb (1881, 40); Benford (1938, 554–557); Hill (1995, 354).

8 Cf. Pinkham (1961, 1223–1225).

9 Cf. Nigrini (2011, 85–86).

10 Other commonly used Goodness-of-Fit-Tests are the Kolmogorov-Smirnov-Test and the Kuiper-Test.

11 Cf. United Nations Office for Disarmament Affairs (2012b).

12 Cf. United Nations Office for Disarmament Affairs (2011a, 2).

13 Cf. United Nations Office for Disarmament Affairs (2010, 8).

14 Cf. United Nations Office for Disarmament Affairs (2010, 9).

15 Cf. United Nations Office for Disarmament Affairs (2010, 22).

16 Cf. http://unhq-appspub-01.un.org/UNODA/Milex.nsf

17 Cf. http://milexdata.sipri.org/

18 Cf. http://www.pcr.uu.se/research/ucdp/datasets/ucdp_prio_armed_conflict_dataset