You're right! It's the upper arm, it's way too short compared to the forearm.
Remember, arms are divided very nearly in half at the elbow, you can see this for yourself by bending your arm up against itself to meet your hand at your shoulder.
It'd be an easy fix though, just try and shift the elbow up until it looks about equal.
Forearms ARE actually a bit shorter than the upper arm from shoulder to elbow, with the wrist coming about an inch short of the top of my shoulder personally as a point of measurement, but the hand is big enough that this wouldn't be noticeable to someone not well-versed in anatomy.