# Empirical Evidence

## What is Empirical Evidence?

Definition: Any evidence that is obtained from data is referred to as empirical evidence. This information can then be used to test a particular hypothesis or belief. At times, the empirical evidence that has been gathered can help to confirm a particular theory. On the other hand, this evidence may help to disprove a notion that was held to be true.

## What does Empirical Evidence mean?

Instead of proceeding on a hunch or simply making an assumption about a matter, it’s better to base your conclusions on facts and data. This data can then be used to test the assumptions that you have made so that you can come to a definite conclusion.

If you plan to use empirical evidence to test a particular hypothesis, you would need to take the following steps:

1. Frame the question or the issue that you are trying to address.
2. Arrive at the hypothesis that you want to verify.
3. The next step is to collect the relevant data.
4. Now, you will need to analyze the data that you have gathered.
5. Does the data support the hypothesis that you have made in Step 2?
6. If your answer to Step 5 is “yes,” then your empirical evidences supports your hypothesis. If the answer is “no,” you may need to reframe your hypothesis. Of course, this assumes that you have not made any error in the data collection process.

## Example of Empirical Evidence

Here’s a good way to understand how empirical evidence can be used to test a hypothesis. Consider a situation where the management of Knightsbridge Corporation thinks that there is an ongoing fraud in their accounts department. But they don’t have any proof to back their suspicion.

Benford’s Law can be used to test the theory that someone in the company is stealing the company’s money by making fraudulent claims for expenses.

According to Benford’s Law, in many data sets the first digit of various numbers conforms to a particular pattern. It’s important to understand what the first digit refers to:

• In the number 5,651, 5 is the first digit.
• In the number 372,943, 3 is the first digit.
• In the number 9,995,300, 9 is the first digit.

Benford’s Law states that the probability of the first digit being a particular number is as follows:

 First digit Probability 1 0.301 2 0.176 3 0.125 4 0.097 5 0.079 6 0.067 7 0.058 8 0.051 9 0.046

It’s apparent that in many data sets, the distribution of the first digits of various numbers is not even. Lower numbers occur more frequently.

Knightsbridge Corporation’s expense data can be analyzed to see if it fits into the pattern described by Benford’s Law. If the data does not conform to the probabilities listed above, it could be an indication that the management’s suspicion is well founded.

## Summary

Empirical evidence can be very useful to test a particular theory. However, it is important to ensure the accuracy and quality of the data that is being collected. Flawed data will invariably lead to incorrect results.