The genetic architecture of human diseases and complex traits has been extensively studied, but little is known about the relationship of causal disease effect sizes between proximal SNPs, which have largely been assumed to be independent. We introduce a new method, LD SNP-pair effect correlation regression (LDSPEC), to estimate the correlation of causal disease effect sizes of derived alleles between proximal SNPs, depending on their allele frequencies, LD, and functional annotations; LDSPEC produced robust estimates in simulations across various genetic architectures. We applied LDSPEC to 70 diseases and complex traits from the UK Biobank (average N=306K), meta-analyzing results across diseases/traits. We detected significantly nonzero effect correlations for proximal SNP pairs (e.g., -0.37±0.09 for low-frequency positive-LD 0-100bp SNP pairs) that decayed with distance (e.g., -0.07±0.01 for low-frequency positive-LD 1-10kb), varied with allele frequency (e.g., -0.15±0.04 for common positive-LD 0-100bp), and varied with LD between SNPs (e.g., +0.12±0.05 for common negative-LD 0-100bp) (because we consider derived alleles, positive-LD and negative-LD SNP pairs may yield very different results). We further determined that SNP pairs with shared functions had stronger effect correlations that spanned longer genomic distances, e.g., -0.37±0.08 for low-frequency positive-LD same-gene promoter SNP pairs (average genomic distance of 47kb (due to alternative splicing)) and -0.32±0.04 for low-frequency positive-LD H3K27ac 0-1kb SNP pairs. Consequently, SNP-heritability estimates were substantially smaller than estimates of the sum of causal effect size variances across all SNPs (ratio of 0.87±0.02 across diseases/traits), particularly for certain functional annotations (e.g., 0.78±0.01 for common Super enhancer SNPs)-even though these quantities are widely assumed to be equal. We recapitulated our findings via forward simulations with an evolutionary model involving stabilizing selection, implicating the action of linkage masking, whereby haplotypes containing linked SNPs with opposite effects on disease have reduced effects on fitness and escape negative selection.