We studied costs and benefits of life history shifts of water fleas (genus Daphnia) in response to infochemicals from planktivorous fish. We applied a dynamic energy budget model to investigate the resource allocation patterns underlying the observed life history shifts and their adaptive value under size selective predation in one coherent analysis. Using a published data set of life history shifts in response to fish infochemicals we show that Daphnia invests less energy in somatic growth in the fish treatment. This observation complies with theoretical predictions on optimal resource allocation. However, the observed patterns of phenotypic plasticity cannot be explained by changes in resource allocation patterns alone because our model-based analysis of the empirical data clearly identified additional bioenergetic costs in the fish treatments. Consequently, the response to fish kairomone only becomes adaptive if the intensity of size selective predation surpasses a certain critical level. We believe that this is the first study that puts resource allocation, energetic costs, and adaptive value of predator induced life-history shifts – using empirical data – into one theoretical framework.