A Timely Observation on Our Economic Status

by Siegfried Othmer | March 13th, 2009

A Timely Observation on Our Economic Status by Siegfried Othmer, Ph.DSeveral disjoint pieces of information have been intruding on my consciousness for some while. At last year’s NBA finals, a courtside seat at Staples Center went for more than $27,000. That was for a single game. At about the same time, I noticed an ad informing readers that the 99cent store also had a bridal registry. These nuggets nicely encapsulate the two economic realms that coexist in our nation, particularly in our cities. The pattern is replicated abroad. In the world at large, there are enough cell phones for two-thirds of the world’s population, while the remaining one-third lives on less than $2 per day. When it comes to meeting basic survival needs, the amounts required are modest indeed, even in our society.

There are several implications. First of all, the economy we have is largely discretionary. Secondly, if the people at the bottom lose their livelihood, this can get lost in the economic aggregates. We cannot look to the aggregate economic pulse as an index to suffering. We have to look for it directly. The signposts are everywhere. A car’s windshield is smashed to yield an old iPod that is worth perhaps $30 on the street. A man slashes all the tires in a parking lot–no doubt the signature of seething resentments. A father kills himself and his family because of a $6,000 debt that he cannot cover.

The Fed is projecting on the order of 1.2% decline in economic aggregates for the year. Of course Fed projections are really lagging indicators. It does not want to be harbinger of bad news. But even if things turn out to be even three to six times worse, somehow that does not seem sufficient to put our society into crisis. The real crisis in fact lies elsewhere. At the bottom end, we have people falling out of the cash economy into penury. At the top end, we have the collapse of asset valuations. And in the middle we have a lot of stress and angst.

These problems do not all yield to the same solution. The problem at the bottom is most easily dealt with by direct aid, and it won’t actually take that much. The problem in the middle goes generally with the economy. A small overall shrinkage for a period of time should not be a big deal, and it is readily countered by infrastructure investments by government. It is the problem at the top, namely the collapse in asset values, that does not have a viable remedy. Yet this is the problem that the Federal government is trying to fix. We had a bubble economy. The bubble burst. We have to get back to reality, unfortunately.

At the Federal level, we are still looking for a top-down solution, and that will not work to salvage our economy just as it has not served to sustain our economy. Capital is highly risk-averse. That’s why U.S. Treasury Notes are selling at such low interest rates (0.3% for three-month notes). That’s why the banks are not lending. This trend was already setting in before the bubble burst, as seen most obviously in share buy-backs by companies. Companies had nothing better to do with their money than give it back to their stockholders or hold cash in the bank (at the rate of a cumulative $1 Trillion last year). Even Microsoft, Intel, and Exxon were hoarding their cash. So where was growth going to come from? It came from the money-changers themselves through asset bubbles, which hid for a time the disagreeable underlying realities. The above argument should make it clear that the future we aspire to cannot simply be a restoration of the immediate past. There must be an escape route, and that is usually found via the path of innovation.

True innovation comes from unpredictable places, but historically it has mostly come from the bottom. And yet the up and coming enterprises have always been shut out from the fountains of investment capital. The most immediate growth possibilities for our economy lie with those corporations that are at the edge of take-off, the $1M to $10M enterprises that incubate new technologies, and these typically do not have access to bank capital. Some get vulture capital; some grow by boot-strapping; the rest are stunted in their growth. So the real problem is not even being addressed.

This brings us to neurofeedback. Neurofeedback is a disruptive technology that is at the point of takeoff. It can grow the economy in several ways. First of all, it is directly relevant to two of the big agendas President Obama has set: education and health care. Neurofeedback can be the key to cost reduction in both areas. Surprisingly, the bigger cost in both areas is not even the cost of service, but rather the cost of failure – the dropout rate in education; parking children in special education; and the failure to solve medical problems with the available remedies, so that costs are perpetuated over the lifespan. Success in health care and in education are the keys to cost reduction. Of course one does not hear this from the policy makers because they are not in a position to predict where such success will come from. One cannot schedule breakthroughs.

The timing is now perfect for the takeoff of neurofeedback. Some of us have been expecting it for some years, of course, but then entrepreneurs have to be optimists. The near-term impact of the introduction of this technology will be to help grow the economy as we staff up to serve the country’s needs. The longer-term impact will be to introduce major cost savings. This is the same rationale by which the nation is now investing in green technologies and such items as electronic medical records. The direct economic impact of growth in neurofeedback will of course remain small. The current size of the biofeedback/neurofeedback market is probably in excess of $2 Billion/yr in services. With some encouragement, this figure could grow by 100% per annum. Even so, this amount gets lost in a $14 Trillion economy. The point is that a near-term societal investment in this technology is exceedingly worthwhile. And that is because the beneficial economic impact is a multiple of 20 to 100 higher than the initial investment.

This impact is largely to be felt in avoided costs, but these are just as important economically. If costs can be avoided in prison systems because of reduced recidivism and successful addictions treatment, the economy can yield higher satisfactions at a lower burn-rate. The same argument applies to our children in special education, in juvenile justice, and in foster care. It applies to our returning veterans; to the elderly in failing mental health; and to all those struggling with minor or even major mental health issues. A substantial fraction of our population is functioning sub-optimally, but this has not been a public policy issue because no remedy was in sight. Now there is.

Neurofeedback can be helpful with the existential problems in our society. We can rescue the down-and-out and help to alleviate the suffering at the bottom; we can help with stress tolerance in the middle; we can keep the top end productive; and we can enhance functional competences throughout. Nothing I know of could do more than neurofeedback to restore our national technological leadership. The technologically most relevant frontier is that of biology; within that broad sphere it is the realm of brain function; and within the domain of brain function it is the self-regulation based modalities, with the neuromodulation technologies foremost among them.

How is this glorious future to come about? Right now, the field of biofeedback and neurofeedback is growing organically via increasing customer demand, with an annual growth rate of about 30%. If neurofeedback is to be placed on a fast track for economic growth and cost-saving objectives, then that growth must be funded. This must occur through a combination of investor capital and demand-pull that is funded by government. The latter will draw the former. Just as schooling is cost-free to the user, neurofeedback for academic functioning must also be cost-free. There is no alternative but to tax those who still have money left over in order to bring this about. (The fellow that can afford $27,000 for a seat at a ballgame comes to mind.) We will all be better off for having done so. The objective here is not one of wealth distribution. The objective is to evolve our high-technology society into one that is functional for all its stake holders.

Every child costs our government on the order of $100,000 for schooling up to college. A mere two percent increment on that cost can increase the effectiveness of that investment for nearly all, and particularly for those who are currently failing in our system (and who therefore cost significantly more). It is said that the cost of maintaining a serviceman in the combat theatre is about $750,000 per year. A little bit of neurofeedback will keep that high-value person optimally fit cognitively, physiologically, and emotionally. The cost of maintaining prisoners is on the order of $50,000 per year. Two-thirds of them end up back in prison after release. That burden can be significantly truncated with neurofeedback to address impulse control disorders, addictions, and the propensity toward violence. We know how to do this.

The focus of policy-makers on the economic and financial aggregates follows from the fact that they need to intervene at that level with the instruments at their disposal. But that is not the level at which the real problems of the society actually get solved. The cost of neglect of societal problems is not visible at that level. These problems must be targeted directly. Fortunately that can often be done very inexpensively, offering a huge benefit-to-cost ratio. We must look to radical innovation to alter the disagreeable calculus of decline and beat a more hopeful path toward the future. Neurofeedback technology to recover and augment brain function represents just such an innovation.

Siegfried Othmer, Ph.D.

7 Responses to “A Timely Observation on Our Economic Status”

  1. Cathy Gayron says:

    I often work with low income individuals and families in my private mental health practice. As a new provider of neurofeedback services I am concerned that as this area of my practice grows I will not be able to afford to serve the poor who desperately need broader alternatives to traditional mental health treatment. The cost of continued education and equipment will make it necessary for me to charge fee for service rates that well exceed what insurance companies provide. As you stated in your newsletter, neurofeedback would save not only money but countless years of human misery. The question I offer is how do we empower the NF movement to move toward greater access for all people especially when pharmaceutical companies continue to occupy a political powerbase that maintains their wealth and limits options for alternative care?

  2. For most people who cannot afford neurofeedback, the solution must be an institutional one.
    That is quite possibly not long in coming because the most severe problems cannot be resolved effectively by medications. Institutions will start adopting neurofeedback in their own self-interest, because they are coming to be overwhelmed–the problem of returning veterans; the population bulge of the aging; educational failure; prisons bursting at the seams; substance abuse and addictions treatment; chronic pain.

    The individual practitioner can do little more than model correct behavior by taking on some pro bono cases. Those who benefit then also become agents of change. The demand for the service from those in need will become the other major force for change.

  3. Sarah Dees says:

    This article is excellent! I will share it with many people. After suffering a serious “permanent” nerve injury which has forced me to live on painkilling drugs for the past six years, due to being hit by a truck in an auto wreck, I was helped tremendously by Neurofeedback, provided by Dr. Diana Pollock of Clinical Neurological Specialties in Clearwater, Florida. I paid cash for the treatments, three sessions of twenty treatments over the span of a year, which greatly reduced my need for narcotic and other medication and improved my quality of life. Neurofeedback also increased my ability to function, and gave me tremendous emotional relief from life-long burdens. My daughter also took one session of twenty treatments at age nine, and was cured of nightmares which resulted from the trauma following my injury and the divorce we went through from her emotionally abusive father which followed the wreck injury.

    Although it was worth every penny, and I recommend the therapy to everyone, the cost to me from my limited funds after my divorce was $1400 x 4 sessions of treatments, a total of $5,600. Of course, since this was non-drug therapy, even though I was fully covered by major medical insurance coverage, no medical insurance coverage was allowed for this treatment, which helped me more than any other treatment could, and which actually solved the problem to a large extent.

    Unfortunately for me, things got worse after that, as I was diagnosed with a tumor and then went through a year of treatment for colorectal cancer. After being tortured miserably to near death from Chemotherapy and Radiation, I finally recovered, and the cancer was “cured”. However, the chemo and the radiation directed to my mid-section once again exacerbated the Sciatic nerve injury in my lower spinal area, and I am back to living on narcotic drugs again, to ward off chronic pain which can hover at the top of the pain charts without drugs.

    I would love to go back for more Neurofeedback therapy and I know it would help me again, to conquer the physical and emotional pain I suffered as a result of my battle with cancer. I can’t afford the therapy though….the cancer treatment has already left me financially devastated, deeply in debt and at the point of losing my home. Why is such an effective and side-effect free treatment only available to the wealthy, who can afford to pay the high price of full cash cost, with no help from any health insurance plan? I have to continue to visit my Neurologist quarterly, and take drugs I hate and can’t afford every day. This condition will be ongoing and continue to cost both the medical insurance company and me money, and require expensive drugs just for maintenance. As Dr. Othmar clearly explains, my condition could actually be cured and these ongoing costs could end. This would result in immediate savings for the doctor visits and drugs, as well as resulting in major life changes for me, making me more capable and functional so that I can work in less misery and create more income as one of the capable producers in the “middle”. The only thing keeping me from going back for more Neurofeedback treatments is my lack of ability to pay for it.

    If my story can support your statements, from the “grassroots” level, as a person who has benefited greatly by Neurofeedback therapy, I hope that I can be one voice for positive change. Neurofeedback could be a miracle cure for millions of people who suffer from chronic pain like me, from cancer survivors, from people who suffer with so many different kinds of afflictions it would take the length of another whole article just to list them. by Sarah Dees

  4. You might ask Dr. Pollock if she would support home use in your case. That would be the most cost-effective way for you to benefit from ongoing neurofeedback training. In cases of chronic pain, there is typically benefit from longer-term training. You would rent the equipment to have it in your home, and you would be guided by Dr. Pollock in your protocols. You would just have to see her occasionally to check on progress. It is even possible for Dr. Pollock to monitor your progress via our web-based symptom-tracking program.

    You could also take this up with your insurance company. They might well regard this as a creative solution and support the rental cost of the instrumentation. The upside for them is that you might then be able to get off the expensive medications.

  5. Alicia says:

    Excellent! Thanks for sharing the info. You write really well. Hope to see much more flowing from your end. Cheers 🙂

  6. Alvaro says:

    Very good article. Could you share the source/ methodology behind estimate “The current size of the biofeedback/neurofeedback market is probably in excess of $2 Billion/yr in services”?

    We are now compiling relevant market data.

    Thank you very much

  7. My estimate is not based on anything so solid that it might help you in solidifying your market estimates. I combine information on how many practitioners have been trained with how many biofeedback/neurofeedback instruments have been sold, with an estimate of how much business a practitioner has to be doing in order to stay commercially viable. Much of the field is invisible to me because data on sales rates are not public. As a result, my estimates are most likely conservative. I can defend the estimate that the neurofeedback field alone is above $1B in annual turnover, and I believe that the total biofeedback field is still bigger than neurofeedback. Hence $2B is a conservative estimate for both together.

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