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Probability theory and statistics

Logarithms arise in probability theory: the law of large numbers dictates that, for a fair coin, as the number of coin-tosses increases to infinity, the observed proportion of heads approaches one-half. The fluctuations of this proportion about one-half are described by the law of the iterated logarithm.

Logarithms also occur in log-normal distributions. When the logarithm of a random variable has a normal distribution, the variable is said to have a log-normal distribution. Log-normal distributions are encountered in many fields, wherever a variable is formed as the product of many independent positive random variables, for example in the study of turbulence.

Logarithms are used for maximum-likelihood estimation of parametric statistical models. For such a model, the likelihood function depends on at least one parameter that must be estimated. A maximum of the likelihood function occurs at the same parameter-value as a maximum of the logarithm of the likelihood (the " log likelihood "), because the logarithm is an increasing function. The log-likelihood is easier to maximize, especially for the multiplied likelihoods for independent random variables.

Benford's law describes the occurrence of digits in many data sets, such as heights of buildings. According to Benford's law, the probability that the first decimal-digit of an item in the data sample is d (from 1 to 9) equals log (d + 1) − log (d), regardless of the unit of measurement. Thus, about 30% of the data can be expected to have 1 as first digit, 18% start with 2, etc. Auditors examine deviations from Benford's law to detect fraudulent accounting.

The logarithm transformation is a type of data transformation used to bring the empirical distribution closer to the assumed one.