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If you just give them money, some significant portion of the population will spend it on a new plasma TV instead of holding on to it to pay for government services when they need it. If you give them an EBT card that can't be used for a plasma TV, they're more likely to remember the card when it comes time to "buy" government services.
Right, but they'll also, sometimes at least, figure out the best ways to convert the EBT card into a plasma TV, through some other good along the way. At least, I would imagine? A simple example is using government electricity to do things you can get money from (bitcoin mining??), but I'm sure there are all sorts of other things you do, if you wanted to be irresponsible with the money.
You're right that some percentage will absolutely figure out how to game the system. We already know this because people have been buying (or stealing) laundry detergent and soda and converting that to drugs. See, e.g., https://www.aei.org/carpe-diem/the-tide-theft-phenomenon-why-has-the-laundry-detergent-become-such-a-hot-commodity-among-thieves-at-drugstores/
However, this requires more effort than trading cash for drugs/plasma TVs. That additional step reduces misuse of the government handout. Of course, the question then becomes whether that reduction is enough to offset the costs of the EBT program plus any unintended consequences. But at a first pass, it's reasonable to expect that a restricted debit card is going to be more effective than straight cash.
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