I thought the idea that people were better at allocating money from themselves is more like:

are you better off if I give you $1k no string attached or $1k specifying down to the cent how you are to use it?

Generally speaking people know what their needs are and how to balance them more than complete strangers or even, often, friends. Yes, people have weaknesses, but to try to rule over their weaknesses is highly paternalistic and demeaning. Moreover because of the fungibility of money, in the end often the person will find a way to spend an equivalent batch of the same money in the way they would have anyways.