Ecconomics always depends on the situation of the person in question. I want a 100 room mansion with my own pipe organ, and whatever other "scoopy-doo" things I can dream of. I want servants to take care of it. I want... I can't afford that, but I can afford a single family house so that is what I have.

Most people living with roommates don't want that situation (here I distiguish roomates from someone you have a romantic tie with), but it is the best compromise. Roommates save money which is important when you don't have enough (hint almost nobody has enough money - even billionairs sometimes have to not buy something they want because their budget can't afford it)

SRO would solve a lot of problems. There are some people that is the only living situation they could afford. There are some people who want to spend their money on other things and so the savings from SRO enables that other thing they want. Many of those latter will "settle down and get married" in a few years thus changing their life situation, that is okay, life is not static.

I think it's also correct (and important) to acknowledge the problems that SROs were causing, and why people turned against them in general.

If you refuse to acknowledge the problem, you're doomed to repeat the cycle again when the problems start happening again.

(Many of the problems can be mitigated against if you admit they exist, and work with them.)