So why not just give the boy cash? Surely cash would allow an even more efficient allocation of resources? But cash is inferior, I think, because cash, like it or not, carries with it some assumption of responsibility. You don’t want to waste your cash frivolously, or you might feel compelled to save it for some greater goal. You might end up, horror of horrors, being forced to use it to buy some other kid a birthday present! But a gift-card to, say, GameStop, is a ticket to freedom. Go be frivolous! Buy a game! Buy whatever game you want! It’s better than money because it comes with an explicit, unignorable directive to use it in a way that gives you pleasure.
I, like the quote’s author, recognize the scam of gift cards, however, he makes a good point. In fact, I had a similar conversation with someone a few months ago (if it was you raise your hand and I’ll credit you properly) about the idea that the best way for the government to stimulate the economy would have been to give money back in gift card form. The money would go straight into businesses that employ lots of folks and us citizens would get to go out and buy a video game on Washington’s dime.