Earlier quoted context omitted.
The cost of flying has gone down significantly over time so I would not be so sure about that.
The price per square inch of human space has probably stayed the same after inflation adjustment. People on average are just more likely to buy cheaper seats than more room, so by natural selection we get smaller seats.
What has changed is yield management — airlines have got much better at flying with as few empty seats as possible. So the main thing that has gone down to allow prices to decrease in real terms is your chance of getting an empty seat next to you.