Or, in many cases, people have done the mental calculus between free, powerful, entertaining services and their privacy rights and have chosen the former.
Correct. It's best modeled by neither 1984 or Brave New World---It's "The Ones Who Walk Away From Omelas."
People get the basics that there are breakdowns in the system of safeguards and a non-zero chance that they'll be the victim of a crime or injustice facilitated by ubiquitous observation. But relative to the benefits, the odds they'll be the one locked in the dungeon suffering are so low that they'll readily shoulder that risk for the observed, immediate, and obvious benefits.
I know few people who can do mental calculus, fewer who can perform the cost benefit analysis you describe and none who have the right to make that decision for everyone else, but that's exactly what happens
In the real world, maybe 5% do the math. The rest are dazzled or browbeaten by apps and continuous demands for some permission they don't fully understand the scope of.
