It is wrong to assume that the individual always knows best  With subsidies at least the government knows what their money is being spent on. This is not the case with cash; it just gets taken and can be spent on anything. As already mentioned the most obvious examples are where the individual uses the money they are given on drugs or other harmful products not what they need. Yet there are times where individuals may simply not have their own best interests at heart for various reasons, particularly because they know no better. This does not just happen in economic situations but also in public heath. For example development agencies know that cooking on open fires in homes leads to thousands of deaths every year and is costly in terms of fuel. So thousands of clean smokeless stoves have been given out yet they are not being used despite them being cheaper to run and potentially a life saver. [1]  [1] Duflo, Esther, et al., ‘Up in Smoke: The Influence of Household Behavior on the Long-Run Impact of Improved Cooking Stoves’, MIT Department of Economics Working Paper, No.12-10, 16 April 2012