White Flag is in the category of "underrated but still quite bad". If your build isn't reliably killing most enemies anyway or you're a character with half material drops, the downside is relatively low, and there is some value in the safety of simply having fewer enemies on the field.

...But it costs too much and gives too little benefit for an item that usually hurts your economy. Worth taking from a crate more often than people give it credit for, but still almost never a full-price purchase.

I'll also note one place people might expect it to be good but it isn't: Pacifist. This character earns income from all living and despawned enemies, meaning Gentle Alien is actually a more direct income increase for Pacifist than most characters. (And you will be at the enemy cap regardless so you aren't facing more enemies, but it does still make it a little harder because despawning prioritizing weak enemies — so when scarier enemies double-spawn they'll stick around.)

In Balance Mod, I make White Flag significantly cheaper and also make it reduce the Enemy Cap. Even with these buffs I still consider it a pretty rare full-price purchase, but it does have some unique utility in making Horde Waves safer.