Most of us spend a lot of time indoors - and that ceiling somewhere above our heads has a lot of influence on us psychologically.
We're more creative in spaces with higher ceilings. All else being equal, people are more innovative in places with 10 foot ceilings than they are when the ceiling hovers 8 feet above the floor.
When the ceiling in a room we're in is lower than about 9 feet, we start to feel crowded and want other people (except those we're on really good terms with) to stay farther away from us. If we feel crowded or cramped we get stressed and distracted from whatever we're trying to accomplish.
Really high ceilings produce negative effects, as well. The great rooms in McMansions never feel cozy because their ceilings are so high that they distort the socializing happening under them.
Not only do we look at other people to determine how far away from us they are, we also consider what they sound like when we're locating them. When sound from another person is bouncing off of a higher ceiling, we feel farther from that other person - as if we're standing at the appropriate distance for the formal situations that normally take place in rooms with high ceilings. To make everything square up in our minds, when the sensory cues we're getting say "formal situation," we act formally. When we're in a space with ceilings around 9 feet high, we're more likely having a conversation with a friend and interpret the sound bounce we encounter in that sort of setting accordingly. When ceilings are really low, say 5 feet, we expect to be with people that we're intimate with. Interestingly, the top of a canopy bed is normally about 5 feet above sleepers' heads.
Variations in ceiling heights are good for us psychologically. Assorted ceiling heights within a space create clearly different zones; each height seems like a different "neighborhood." All human beings - individually as well as groups - need a territory that belongs to them - and those different spaces can establish those "owned" areas. We can decompress in our own spaces - so they reduce our stress levels. We also personalize them to show others (and ourselves while we're at it) who we are. That makes us more comfortable psychologically.
Different ceiling heights can also add visual interest to a space and mark our passage through it if we travel from one ceiling height on to the next. They can help create that level of moderate visual complexity we enjoy, so they are particularly useful in a modernist space without too many other embellishments.
We feel very comfortable in spaces with lower ceilings that are next to areas with higher ceilings when the space with the lower ceiling is a little darker and the area with the higher ceiling is a little brighter. That darker space with the lower ceiling feels cozy, in the same way that a cave with a view out over a plain must have felt secure to our ancestors.
The sound bounce never lies, but we can have some influence on how spacious a room feels by modifying the color of paint on the ceiling. Lighter, brighter colors make the ceiling seem father away, while darker colors make it seem closer.
It's not easy to alter the height of a ceiling - but you can choose a room with the ceiling, or combination of ceilings, that meets your psychological needs.