What is the word used for categorizing people as different from oneself?

They

The correct answer is Option 2:They

NCERT: Just as individuals compare themselves with others in terms of similarities and differences with respect to what they have and what others have, individuals also compare the group they belong to with groups of which they are not a member. The term ‘ingroup’ refers to one’s own group, and ‘outgroup’ refers to another group. For ingroup members, we use the word ‘we’ while for outgroup members, the word ‘they’ is used. By using the words they and we, one is categorising people as similar or different. It has been found that persons in the ingroup are generally supposed to be similar, are viewed favourably, and have desirable traits. Members of the outgroup are viewed differently and are often perceived negatively in comparison to the ingroup members. Perceptions of ingroup and outgroup affect our social lives.