Pain is painful. And it can be very discouraging to see that your arms and legs have been cut up, bitten, shot, crushed, and broken. I have an idea:
Every 5 pain = -1 morale (1 pain = -1 morale would be too much in my opinion, and just 50 pain will stop you from crafting.) e.g. 55 pain = -11 morale.
Every | of hp gone = -2 morale (I think it is a good compromise between depressing you for taking 5 damage and not doing anything at all.) e.g. ||… head hp = -6 morale.
Pain is VERY unpleasant. It is way more unpleasant than seeing your body damaged to the point of near-death, because pain is a feeling, and a damaged body is just a sight. It’s nearly impossible to suffer pain without taking damage, and completely impossible to take damage without suffering pain (unless you take pain resistant trait which is awesome). Having a damaged body is part of feeling pain, so I think they both go hand in hand and when listed under the morale infobox, should be listed under one cause - suffering. e.g. Suffering -30
I believe it is important to strike a balance between extremely punishing (-200 morale for 20 pain) and ineffectual (-1 morale for 200 pain). It shouldn’t be a main feature of the game (don’t take any damage at all or become really sad), but it shouldn’t be a background annoyance that does nearly nothing. In my head, I think pain and damage decreasing morale should be a minor feature of the game that will affect your experience if you neglect it, but not by too much.