Constitutional Limits to Nudging A Proportionality Assessment

Nudges with paternalistic aims pose special legal problems in liberal States. Surprisingly, the discussion on regulation-by-nudging has not focused on the constitutional limits to nudging. Although the property rights of firms potentially infringed by nudging measures are dealt with in the literature and by (international) courts (eg the tobacco cases), the potential infringement of the rights of those being nudged is neglected. But judges may at one point be confronted with a nudge regulation challenged by the individuals being nudged; and even before reaching a court, the legality of nudging should be scrutinised by legislators. I explore the legal limits of paternalistic nudging under the German Constitution, especially the right to freedom of action and self-determination under Art. 2 (1) German Basic Law, judging different types of nudges by the proportionality principle. The analysis can be extended to other constitutions as well. At issue is the question of how much paternalistic nudging and what types of paternalistic nudges the fundamental rights protection in Germany permits. The proportionality analysis can be applied, mutatis mutandis, to non-paternalistic nudges (targeting externalities and public goods/bads).