Empathy stems from deep imagining.
While imagining a scenario, the mind/brain fires intentional "false triggers" so as to simulate the scenario. It is similar to dreaming. The pain is a deduction from the outcome (as is all pain).

Paradox617 wrote:But why does this only occur in instances of pain or grief, at least in my experience. Why don't these "false tirggers" occur when I am in the company of individuals that have struck it rich?

The empathetic association is not merely instinctive. It depends on other psychological considerations such as trauma. A very good event can be perceived as dark and ugly if the person observing has a childhood trauma associated with it.

If you ever laugh mostly because everyone else was laughing or cheer for a football team's accomplishment even though you have no reason to be associated with that team, then you have experienced the same thing but in the more positive manner. I suspect you prefer movies with happy endings, in which case you are experiencing the same effect.

The positive reaction can be nullified by long term depression and/or deep insecurity (often caused merely by medical influences to which you aren't aware). But if you ever feel the negative effects, then you can feel the positive. The difference being only how much you have allowed (for whatever reason) associations to positive or negative feelings. Always think of the bad concerning everything and you will find it difficult to empathized with the good even though there is usually a reasonable degree of both in everything. That is why they often say, "think positive" and "smile, just because you can". One often needs to intentionally disallow themselves from drowning in their own perspective. Neutral perception is the best wherein you insist on seeing both the possible good and the possible bad in all things.