Why are some countries rich and others poor? Recent literature from the economic growth and development field suggests that factor misallocation explains a significant portion of between-country variation in productivity and income, particularly in the agriculture sector (Adamopoulos et al. (2022); Chen (2017); and Chen et al.(2023)). However, other literature in the field suggests that the aforementioned results can largely be explained by measurement error and unobserved heterogeneity (Gollin and Udry (2021)). Using data from a nationally representative sample in Malawi, I test these theories by sequentially estimating factor misallocation after controlling for measurement error in plot size and agricultural output, heterogeneity in previously unobserved variables such as soil quality, and farmers’ failure to update incorrect priors about agricultural resources at their disposal. I find no evidence that behavioral anomalies significantly impact misallocation estimates. However, cleaner identification with these data is needed before drawing any substantive conclusions. Additionally, I find suggestive evidence that estimates of efficiency gains due to reallocation are sensitive to the choices of production function parameters. These findings suggest caution when interpreting estimated efficiency gains from production functions where parameters are selected rather than estimated from the data.