There are a number of reasons people overrate the past.
As stated above, there’s selective memory, which seems to be tied to the general optimism of the human race. And also noted above, people who were not in groups denied things sometimes fail to acknowledge the plight of people in those groups.
Also, it’s hard to account for some types of improvements. Today, you can watch any movie or TV show, on demand, for a fraction of the minimum hourly wage. In 1970, you had to be rich to do that, and even then, it often was not possible. How much is that improvement worth? Hard to say objectively.
One thing that I believe really warps people’s perspectives on the past: when we’re young, we see depictions of the past which remove much of the unpleasantness. We’re exposed to schoolbook illustrations and Disney movies about the past in which streets weren’t full of manure, lynchings were unheard of, and nobody had polio or smallpox (and adults had all their teeth).
And, a person who isn’t curious enough to learn the whole truth about the past as they grow older can harbor these images as an adult.
Yes, cars pollute. But imagine if we all rode horses instead. Yes, we have more government in our lives. But our children aren’t routinely losing limbs in factories.
One thing that I think was better when I was young (I was born in 1959): the chance to rise up in socioeconomic class (or even stay at the same level as your parents) was available to a larger fraction of the population. In my day, a person of average ability and ambition could get a middle-class job right out of high school. A college degree was much cheaper than it is now, and pretty much guaranteed success. Kids today have to be smarter and/or harder-working to succeed.
But even that benefit was a relatively short-lived aberration, made possible by the U.S.'s position as the only unscathed superpower following WW2. Financial security and social mobility were more widespread when I was a kid than fifty years earlier.