If everyone is travelling in the same aluminum tube why does seat 4a , in front of the curtain COST any more to fly than seat 5a, behind the curtain. It does not. However, It does generate a higher potential return.
If the seat is unoccupied the revenue is zero. If a passenger who has paid for a seat, but not a premium seat, occupies seat 4a then the revenue to the airlinefor the flight is the same. Seat 4a was empty and was therefore not revenue generating. There is no lost opportunity cost as, by the time the flight is loaded, all occupied seats are sold. If a seat is vacant its revenue generating potential is lost and its failure to be occupied has already 'cost' the airline money to move the empty seat from A to B.
Where pax migrate from economy to premium, the number of passengers remains the same, any food consumed was already on board and would have been wasted ( or consumed by CC) and therefore the operational cost ( A/C costs, fuel, staff and associated costs) are the same ( assuming flight catering doesn't refund for unused, out of date meals ( they might sell them to BA!)
Freeloading by self upgrade doesn't actually cost the airline directly unless there are valuable additional services provided - the seats are vacant and are therefore not revenue generating. Indeed, such behaviour is only possible where CC are expecting numbers in premium class which tally with actuals on the flight. Equally, as they get a manifest for each flight they know, or should know, where everyone is sitting or should be sitting.
So Tightshot and others should perhaps be a little less self righteous - when in fact he/she is only drawing attention to the ineptitude, complacency or conspiracy of CC colleagues.
In microeconomic terms I would suggest the following as a means to address this 'problem' - auction.
After boarding, simply auction the premium class seats that remain unoccupied and for which services( food, drinks, complimentary ego massage etc.) are available. Sell to the highest bidder and generate additional revenue from the flight. You will appreciate why airlines don't actually do this - it would only demonstrate to those that have already paid a premium that they had most probably wasted their money and they would be very unlikley to repeat the exercise.
I have been in the front and in the back and to be honest -on short haul it pretty much the same wherever you sit. Long haul - now that is different!