As long as we do not treat this as a dichotomy, and agree that both #1 and #2 are on a scale, this sounds reasonable. It also depends on income. If you have go

As long as we do not treat this as a dichotomy, and agree that both #1 and #2 are on a scale, this sounds reasonable. It also depends on income. If you have good income, you can survive a little bad luck, some suboptimal decisions, and a minor substance abuse. Let's not pretend that middle-class people are all without vice. It is easiest to help people who have a one-off financial problem, but otherwise good education, skills, and habits. A one-off medical expense. A broken car you don't have money to fix, but can't get to your job without. Not enough money to start your own business, despite having a solid business plan. It may still make sense to give cash to both categories, because it would be difficult (and expensive) to distinguish them from outside. Consider the salaries paid to the bureaucrats judging who is worthy of receiving the help, salaries paid to their managers, the expensive offices they would live in, the extra costs they would impose on the people being judged, and the costs of mistakes they would make -- just giving cash to all poor people unconditionally and expecting that half of it will be wasted on hopeless cases may still be much cheaper.