Some people prefer to pay less and survive in economy class.
"Some airlines suggest pulling each knee up toward the chest and holding it there with your hands on your lower leg for 15 seconds, and repeat up to 10 times."
Most modern economy class seats have absolutely no room to do even these limited sorts of movements. And don't even get me started on how bad they are with someone with a disability. Plus, as someone else mentioned, some employers, etc. make you take the lowest cost flight as a matter of policy.
I think in a way this is like healthcare (the analogy is loose, I admit). Sure, some people, maybe even a majority of people can do fine with the unregulated version. But if it is actively dangerous to a smaller segment of the population, regulation will help bring it more in line with normalcy for that smaller segment.
Better seats might not drive more seat upgrades, but it might drive more traffic to your airline.
I think seating in airlines demands regulation. I don't think we will see change here without it, because unlike Premium Economy and Business, where pricing differentiation justifies the spend (the increase in revenue outweighs the engineering costs significantly: Aircraft would be viable long haul solely based on Business and Premium already) there is no pricepoint increase in economy the airlines are willing to make, without being obligated to make it.