TaxCE : A Framework for Automated Taxonomy Construction and Evaluation at Scale

Organizing unstructured feedback text into hierarchical taxonomy is a fundamental challenge in NLP, particularly in domains where feedback arrives at massive scale in varied forms such as reviews, transcripts, and surveys. Existing approaches either produce shallow hierarchies, neglect long-tail topics, or lack rigorous evaluation frameworks. We present TaxCE, a fully automated framework that constructs multi-level hierarchical taxonomies from raw text through progressive condensation of corpus content into actionable segments, deduplicated semantic units, and granular topics with definitions, which are then organized bottom-up into a hierarchy with corpus-groundedness. We also introduce three corpus-grounded evaluation metrics, Exclusivity, Exhaustivity, and Granularity (EEG), and integrate them into a metrics-in-the-loop iterative refinement mechanism that diagnoses deficiencies and applies targeted corrections until convergence. Extensive experiments demonstrate that TaxCE consistently outperforms existing baselines spanning classical topic models, neural methods, and LLM-based approaches, with average improvements of 11.8, 20.5, and 15.7 percentage points in exclusivity, exhaustivity, and granularity respectively over the strongest baseline. Human evaluation further confirms superior taxonomy quality, actionability, and navigability.