Chapter Five of Life, Liberty and the Pursuit of Utility discusses the components of dignity. To possess dignity you must have a degree of choice and control over your life, the life that you lead must be a worthwhile one, and it must carry with it a degree of prestige.
To preserve choice, key elements of one’s cultural identity—such as one’s religion or one’s language— should not be forced on one unwillingly from outside. There is greater dignity in marriage to a partner of one’s choice and in working at a job that one has freely contracted to perform. Dignity is conferred by one’s degree of participation in the political arrangements under which one lives. Regarding job types, the ideal life is one in which there is no clear boundary between work and recreation and which does not require considerable physical or human apparatus to conduct.
Prestige is not an essential constituent of well-being; but it can undoubtedly contribute to and augment it. Prestige is based on one’s possession of goods that arouse the respect and envy of others. These need not be material goods but they are bound to be positional goods; goods that relate to one’s position in society and which of their nature cannot be universally shared, since—in the words of W.S. Gilbert—when everyone is somebody, then no one’s anybody.
Regarding the market, the great inequalities which its free operation builds up may cause great discontent among those at the lower end of the scale, even if in absolute terms their income is enough to provide adequate welfare. Some philosophers regard inequality of wealth as being in and of itself an affront to human dignity. There is no reason, however, why someone with average wealth should feel degraded simply because some other people are very much richer. If the existence of billionaires is the price to be paid for an economic system that is the most efficient method of reducing absolute poverty, we should not oppose it simply because it may mean that a man with only two yachts will be unhappy because his neighbour possesses three.