Economic Spite

Economists talk about the world as if it were made of perfectly rational people, who all wanted to get the best outcome for themselves, and in doing so made the best possible outcome for other people too. Which would be nice, but falls short of real human psychology, which has other, less rational needs.
The more I study economics, and the psychology involved, the more I realize that spite plays an unfortunately large role in monetary affairs. Yes, we like having money, but we often like denying it to someone else more. Even if this denial impoverishes us, we, like captain Ahab, insist that from hell's heart, our enemy be good and stabbed, and damn the consequences!
As an example of this, an economist, Max Bazerman, runs an experiment in which participants bid on a $20 bill, with six rules, most notably that the 1st and 2nd highest bids are given to him, and he gives the bill to the 1st highest bid. Now, rationally, bidding at all isn't necessarily a good idea, because you could lose, and it's definitely moronic to bid more than $10 or so, because your bid eats up your winnings pretty fast. Mr. Bazerman reports that he nearly always makes a profit, often as high as $100. This is irrational...but people keep up the bidding, just to not lose.
Why? Spite. The other person is willing to give several times the prize just to punish their rival for the money. And both are poorer for it. Mr. Bazerman is laughing all the way to the bank.
I see this in other fields too. Much of politics is about spite. People furiously upset about welfare don't blink an eye at other wasteful spending that costs hundreds of times as much. It's not the loss of public funds that's upsetting them. It's that "those people" (read: the poor) that they feel superior to are getting money. Same with a lot of international rivalries -- nations are willing to impoverish themselves to defeat another they consider an enemy, when it would be far more rational, or even sane, to cooperate.
America in particular has a history of spite problems. There were spite houses that people built for that one relative that they hated to live in, and was deliberately made uncomfortable as a subtle dig at the hospitality they felt compelled to provide. There were spite fences that neighbors built too tall just to annoy each other until cities passed laws forbidding malicious construction. There have been years of "identity politics" in which people demand better protection for their group so they can mistreat others. (Especially racially and religiously. Ugh.)
Spite makes the world a worse place to be. People suffer when wrath is poured upon them, sometimes just for existing, and communal values are damaged. Sometimes even the malicious person damages themself in the process, as the old American proverb goes, "Cutting off your nose to spite your face." It makes no sense, and we should stop it at all cost.