Disclosed is a system and method of assessing the efficacy of and predicting response to treatment of neurological or psychological disorders. The preferred embodiment uses at least two surface electrodes to acquire EEG signals from the surface of a patient's body, a processor for computing from the EEG signals various features and indices that are representative of the patient's neurological or psychological state. Pretreatment indices represent a patient's neurological or psychological state and therefore may be used to predict the response to treatment. Changes in these parameters may be used to assess the efficacy of treatment and to modify the treatment to optimize the resultant patient state.