Predators commonly induce phenotypic changes that make prey better at surviving predation at the cost of reduced growth. While we have a good understanding of how trait changes affect predation risk, we lack a mechanistic understanding of why predator-induced phenotypes differ in growth. Using two mesocosm experiments, we combined phenotypic plasticity theory with predictions from optimal digestion theory to demonstrate that intra- and interspecific competition induced relatively long guts while predators induced relatively short guts. The longer guts induced by competition appear to be an adaptive response that allows more efficient digestion and more rapid growth whereas the shorter guts induced by predators appear to result from a tradeoff of building larger tails in predator environments at the cost of smaller bodies. By combining these two bodies of theory, we now have a much better understanding of the mechanisms that cause the phenotypic trade-offs that select for inducible defences.