It’s important to point out to economics students that a lot of policy is driven by envy.
There’s a great example of irrational envy in the episode “Kafkaesque” of Breaking Bad.
In it, Jesse realizes that even though he is being paid $1.5 million to make crystal meth, the street value of the product to the wholesaler who pays him is $96 million.
Walt points out that it’s odd to be unhappy when someone makes you a millionaire, but Jesse doesn’t buy it.
This is related to a common classroom experiment with the ultimatum game. Here’s how it goes. Two players play. A pot of money is set out. The first player is asked to divide it: part for them and part for the second player. If the second player agrees to the division, they both keep the money; if the second player doesn’t agree, neither gets the money.
The rational thing for the first player to do is to divide the money into two unequal piles, and offer the smaller one to the second player.
The rational thing for the second player to do is accept anything offered by the first player: after all, anything they receive is tantamount to a gift.
The thing is, this is exactly what people don’t do. It turns out that once the split gets worse than 40/60, there’s a rapid increase in the unwillingness of the second player to accept the offer of free money.
We see this in current debates about how much of our welfare state “the rich” fund through their taxes. Even though “the rich” currently pay a far higher share of their income as taxes, a fair sized chunk of the population is unhappy with this gift.