Why do people tend to think that their lives are much worse than they actually are?

Well, is no point at which they "actually are" when it comes to that. "Badness" is an entirely subjective experience. You probably mean, "Why do people tend to think that their lives are much worse than other people think they are?"

Because they’ve never lived through really bad?

It's all to do with perspective.

The closer you are to something physically and emotionally the bigger impact it makes in your life.

And the reverse is also true.

Huge disasters appear trivial to someone on the other side of the planet with no emotional connection to the area.

Grass is always greener syndrome. Also, some stupid idea that life is supposed to go as planned.

Everyone goes thru bad times. Hopefully things will get better for them.

Because it's so much easier to focus on the negative than the positive. With the positive, nothing needs to get fixed.

Some have a tendency to exaggerate and some really deal with a lot but are good at keeping their mouth shut

the 15 minutes of victimhood..

used to be of fame..

its hip to be victimized in the future.. GO!.

My opinion is they see all the fake stuff some people have on tv and compare it to that.

Subjective fatalism.