I think it's wise to acknowledge as part of #2 that it's not just because some people are stupid or impulsive or short-sighted. Substance abuse, mental health,

I think it's wise to acknowledge as part of #2 that it's not just because some people are stupid or impulsive or short-sighted. Substance abuse, mental health, past trauma, bad influences, poor family dynamics, etc. all certainly play a part. There probably is a subset of people who, as you say, make bad decisions chronically. But even among those people, you will find that many are either open to or longing for help in making wiser decisions. So the thought process behind just giving them money directly is that they know best what their needs are. But I think an important part of this is also offering them services that would help them make better decisions with that money, such as financial counseling.