ISET Economist Blog

Dumb Farmers Do Not Grow Big Potatoes
Saturday, 12 March, 2016

This week, the Georgian public was shocked when a gross lack of competence and aptitude among the country’s teachers was unveiled.  As reports on March 10th (quoting a Georgian source), of the 10,552 teachers registered for a competence check that took place in January, only 6,477 showed up in the first place, and of these, only 1,101 passed the test. However, the Georgian economy is struck by severe deficits in knowledge and skills in many sectors, and to find such examples, one does not have to look at industries that operate close to the technological frontier. 

In this two-part article, we report on the efforts of UNDP and ISET to shed light on the availability of relevant knowledge and skills in Georgian agriculture. This week, we will speak about the motivation of a study we conduct on this topic and the methodological problems that we faced so far. Next week, we will present and discuss some of our findings.

Being a farmer in Georgia is a status, not a qualification. However, the increasing importance of knowledge, skills, and competencies in Georgia’s rural economy calls for professionalization. The future farmer in Georgia will have a formal qualification from a vocational school which provides the relevant knowledge and skills to run a profitable farm, gain sufficient income for his or her family, and supply high-quality food to domestic and export markets. Based on such a formal qualification, the future Georgian farmer will have access to public and private extension systems (“agricultural extension systems” are providing technical and/or managerial advice to farmers, both through public authorities or private companies, which enables to deal with the challenges facing modern agri-businesses). Looking to Europe, we can identify a very clear principle: only with a formal agricultural qualification, a farmer is eligible to benefit from public support schemes and subsidies. This is where Georgian agriculture is heading.


Agriculture is generally considered to be one of the sectors of the Georgian economy which has the greatest development potential. Productivity leaps seem to be overdue and are expected to occur in the next years (simply based on the fact that Georgian agriculture is extremely unproductive and improvements should be easy to achieve). However, as can be seen in the chart, these expectations were so far not even rudimentarily fulfilled: while agricultural productivity picked up in other transition countries, Georgian productivity dynamics resemble a flat line. To what extent can this disappointing outcome be explained by knowledge gaps and skill deficits of Georgian farmers? 

To address this question, UNDP commissioned a survey among 3,000 Georgian rural households (within the framework of the UNDP project “Modernization of the Vocational Education and Training and Extension Systems Related to Agriculture in Georgia”, supported by the Swiss Cooperation Office South Caucasus). The survey elicited the economic statuses and performances of the respondents and requested a self-assessment of the knowledge and skills in many different agriculture-related activities. The survey focuses on the abundance or scarcity of agricultural human capital, which is a key determinant of agricultural productivity for four reasons. 

Firstly, knowledge and skills are important in themselves. There is a direct impact on the output of the farm if the farmer knows when it is the best time to seed, how to prepare the soil, and how to make use of irrigation, to name just a few of those activities that require knowledge. 

Secondly, knowledge is indispensable for the use of technology, which is, in turn, an important driver of productivity. Without operating and mechanical skills, even simple agricultural machinery cannot be used and maintained, let alone the high-tech equipment deployed in developed countries. Moreover, a lack of knowledge can turn out disastrous in mechanized agricultural production, as it jeopardizes expensive machines and equipment. 

Thirdly, skills are needed to acquire capital for investments. A bank will not hand out credit if there are no sound recordings of production amounts, costs, and prices, which are the basis for any profitability analysis. Collecting and recording such numbers requires basic knowledge in accounting and farm management. More generally, it is no exaggeration to say that the credible competence of a farmer is a precondition for any investor to provide money.  

Fourthly, exploiting benefits or coping with difficult natural conditions depends on knowledge, too. For example, the quality of soil is not an unchangeable parameter but can be improved through crop rotation and other soil fertility measures but can also be spoiled by a farmer not qualified in soil cultivation.


Usually, we would expect that knowledge gaps and output are negatively correlated, i.e. the greater the reported knowledge gaps, the lower the output, and vice versa. However, in the survey, we observe equally often a reverse relationship, where bigger knowledge gaps are associated with higher output. Such an apparently nonsensical correlation is in fact very common in studies that rely on self-assessments, and it is known as the Dunning-Kruger effect (Kruger and Dunning: "Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments", Journal of Personality and Social Psychology 77, 1999, pp. 1121–34).  

Dunning and Kruger, two US psychologists, conducted an experiment in which students had to solve exercises in English grammar. Afterward, they were supposed to estimate how well they did in comparison with the rest of the group. It turned out that those who were in the bottom quartile “grossly overestimated their abilities relative to their peers”, while those who were in the top quartile slightly underestimated themselves. Dunning and Kruger’s explanation is that the knowledge needed to assess one’s own performance is the same as the knowledge which determines the performance itself: “The skills that enable one to construct a grammatical sentence are the same skills necessary to recognize a grammatical sentence, and thus are the same skills necessary to determine if a grammatical mistake has been made”. 

The Dunning-Kruger effect suggests that those Georgian farmers who have little knowledge in a certain area will often not recognize their deficits, as the recognition of the usefulness of additional knowledge requires that one knows already something about the respective activity. 

As in other studies, our solution to this problem was to assume that whenever a reported knowledge gap was correlated with the output, it must affect the output negatively. If the Dunning-Kruger effect was present and the reported effect was positive, we restricted ourselves to identifying that knowledge gap as performance-relevant without estimating the size of the effect.


The primary goal of UNDP is to understand which are the relevant knowledge and skills gaps of Georgian farmers. This analysis will be the basis for designing and upgrading the Georgian system of vocational education and training on the one hand, and of agricultural extension on the other hand. Yet, the data allows analyzing other urgent issues in Georgian agriculture.  

For example, we will identify the characteristics that indicate the economic survival of a farm and estimate the likelihood that the operations will be discontinued. This information is not only important to direct training and extension activities to the right farmers, but also to target the right groups when it comes to social welfare measures and agricultural structure policies. We will also connect our findings with existing survey data on credit supply and default rates, relating knowledge gaps and farm characteristics to one of the most severe impediments of Georgian agriculture, namely the notorious shortage of capital.

In the continuation of this article in the next week, we will present and discuss some interesting results from the pilot report of this project.

The views and analysis in this article belong solely to the author(s) and do not necessarily reflect the views of the international School of Economics at TSU (ISET) or ISET Policty Institute.