This study explored patterns of causal relationships among perception of situational control, health, socioeconomic status, functional dependency, length of stay, and morale in institutionalized elderly. Causal patterns in residents at two levels of care were contrasted. A total of 113 residents on intermediate and skilled care units chosen randomly from 4 urban proprietary nursing homes were studied. Variables were measured by means of an interview. Instruments included the Philadelphia Geriatric Center Morale Scale, Chang's Situational Control of Daily Activities Scale, and the Resident's Questionnaire. Path analysis was used with a causal model to estimate direct and indirect effects of the independent variables on morale. Important differences in the way the independent variables affected morale for residents on the two levels of care were reported. Perception of situational control proved to be a key variable, significantly related to the morale of residents on both levels of care, although the strength of the association was stronger for residents on skilled care. Functional dependency, health, and socioeconomic status had significant direct effects on the morale of residents on intermediate care but not those on skilled care.