To illustrate this fact, I was on the bus a few weeks ago (I use the public transit). There were two high school students who boarded the bus. Their bus passes were refused by the machine, which means that they had expired. However, the bus driver kindly allowed them to get on just the same. Neither of these students even thanked him! I was glad, though, that the driver said to each one of them, "Don't you know how to say 'thank you?'" This resulted in them realizing their mistake and they thanked the driver. It is not just "the younger generation" who are lacking in manners, I just used this experience as an example. :)
I remember the days where a gentleman would give up his seat on the bus for a lady...yes, it happens today, but sadly, it is a rare thing. I see people putting their feet up on seats on the bus, talking very loudly and using curse words, etc.
When I do see a polite or kind gesture or words, I smile, as I want to make it known that it is a good thing, and that just as bad behaviour can be contagious, good behaviour can as well! It has a domino effect.