Thing is, pain doesn’t seem to do enough outside of combat. In combat, it decreases stats and what have you, but outside of it? Nothin’. This makes several things moot, like acid rain and cauterization, if you’re out of combat for either.
So, why shouldn’t pain reduce morale, too? (Exception: Masochist, obviously, which would remove the penalty and increase morale. Masochist should probably be a -3 or -4 point to make up for it.)
Preferably at a 1 pain = -2 or -3 morale, since losing 15 morale from cauterization is hardly an effect, while 30 is a bit more severe and 45 will keep you from crafting or reading because you just gave yourself 3rd degree burns, but I’ll leave balancing up to the devs who are probably smarter than me. And very handsome.
This makes painkillers more useful, aside from just for the sake of jumping back into combat quicker. It makes acid rain more deadly, since you’ll now get depressed at the fact your flesh is sizzling off your skin, rather than it just being harder to fight in. It also makes cauterization a less viable choice outside combat, so you actually have a reason to use all those bottles of disinfectant being stored, rather than just treating every small bite wound by setting your flesh alight, creating a toss-up between morale loss, pain, and minor damage or saving a first-aid kit for later.
It’s also realistic, and seeing as this game is pretty much a zombie survival simulator, realism is always a good thing (so long as it’s properly balanced, which I feel this is.)