Abstract Background Improved sanitation has been associated with improved child growth in observational studies, but multiple randomized trials that delivered improved sanitation found no effect on child growth. We assessed to what extent differences in the effect estimated in the two study designs (the effect of treatment in observational studies and the effect of treatment assignment in trials) could explain the contradictory results. Methods We used parametric g-computation in five prospective studies (n = 21 524) and 59 cross-sectional Demographic and Health Surveys (DHS; n = 158 439). We compared the average treatment effect (ATE) for improved sanitation on mean length-for-age z-score (LAZ) among children aged <2 years to population intervention effects (PIEs), which are the observational analogue of the effect estimated in trials in which some participants are already exposed. Results The ATE was >0.15 z-scores, a clinically meaningful difference, in most prospective studies but in <20% of DHS surveys. The PIE was always smaller than the ATE, and the magnitude of difference depended on the baseline prevalence of the improved sanitation. Interventions with suboptimal coverage and interventions delivered in populations with higher mean LAZ had a smaller effect on population-level LAZ. Conclusions Estimates of PIEs corresponding to anticipated trial results were often smaller than clinically meaningful effects. Incongruence between observational associations and null trial results may in part be explained by expected differences between the effects estimated. Using observational ATEs to set expectations for trials may overestimate the impact that sanitation interventions can achieve. PIEs predict realistic effects and should be more routinely estimated.