(FORTUNE Magazine) – Dear Mr. Statistics: I reside richly in idyllic Palm Springs, California, a locale where a fellow is supposed to have no worries except about possibly getting beaned by a golf ball. But lately the chatter in the pro shop has taken a markedly serious turn. The guys tell me there is a real possibility of a devastating earthquake's hitting our expensive community sometime in the not too distant future, and some of them go on to tearfully conjecture that this could adversely affect property values. My question is: Should I sell now, or just have an extra martini at twilight? -- Richter on My Mind.

Dear Rich: Your question is framed somewhat dopily. The efficient-market hypothesis tells us that property values in Palm Springs have already been affected by the tectonic traumas you are adumbrating. A reasonable estimate would be that the earthquake effect has reduced area property values by one- third in recent weeks. What has happened lately? Mainly a flood of reanalyses by seismologists, many of whom have updated their old projections as more data became available on the June 28, 1992, earthquake near Landers, California -- a temblor registering 7.5 on the Richter scale. Recent articles in the British journal Nature and in Science, published by the American Association for the Advancement of Science, bear grim news. A threshold question about any recent earthquake is whether it has relieved or intensified stresses along the adjacent fault lines. Analyses of the Landers spectacular suggest that it relieved pressures along the Mojave segment of the San Andreas fault line but substantially increased pressures in the segments beneath the San Bernardino Mountains and the Coachella Valley. According to Nature, the San Bernardino area is ''highly ripe for an earthquake of magnitude 7.5 or more . . . Areas including . . . Palm Springs . . . could suffer greatly.'' What does ''highly ripe'' mean? Before the Landers data became available, the scholars collectively known as the Working Group on California Earthquake Probabilities (WGCEP) had estimated that there was a 40% probability of a 7.5+ event in your area by the year 2018. That works out to a probability of 1.3% a year -- a figure that has presumably been reflected in property values for many years. Eyeing the Landers data, WGCEP now says the probability of a Big One in your backyard has increased by a factor of between two and five. Taking the midpoint of that range -- i.e., an increase of 3 1/2 times -- and multiplying it by the old odds of your area's getting clobbered, we get new odds of about 4.5% a year. On a standard Palm Springs $2 million house, the difference between the old and new odds of annihilation works out to an additional annual ''cost'' to the home's owner of $64,000. (The cost may be thought of as the value of the property multiplied by the probability of its being wiped out.) Assuming a discount rate of 7% in the years ahead, that dollar decrement by itself would reduce the present value of the property from $2 million to about $1,300,000. With or without a martini.