Reasoning for Hierarchical Text Classification: The Case of Patents

LLMs have advanced text classification, yet existing paradigms face a trade-off: supervised (label only) fine-tuning is scalable but offers limited reasoning on complex text and lacks broader model transparency, while discrete prompt optimization offers human-readable instructions but struggles with performance and scalability. We introduce eXTC (eXplainable Text Classifier) with three progressive stages: (1) learning a Standard Operating Procedure (SOP, or rulebook) in natural language via a new Structured Prompt Optimization algorithm; (2) SOP-grounded reasoning distillation from a large teacher LLM into a compact LM; and (3) expanding reasoning capabilities beyond the initial SOP via reinforcement learning. This design enables eXTC to provide (i) fast inference via a compact LM, with (ii) inference-time local reasoning traces, alongside a global, modular explanation of its learned domain rules, while (iii) significantly outperforming existing paradigms across diverse benchmarks in both classification performance and explanation quality, with stage-by-stage gains.

Eliciting explicit, step-by-step reasoning traces from large language models (LLMs) has emerged as a dominant paradigm for enhancing model capabilities. Although such reasoning strategies were originally designed for problems requiring explicit multi-step reasoning, they have increasingly been applied to a broad range of NLP tasks. This expansion implicitly assumes that deliberative reasoning uniformly benefits heterogeneous tasks. However, whether such reasoning mechanisms truly benefit classification tasks remains largely underexplored, especially considering their substantial token and time costs. To fill this gap, we introduce TextReasoningBench, a systematic benchmark designed to evaluate the effectiveness and efficiency of reasoning strategies for text classification with LLMs. We compare seven reasoning strategies, namely IO, CoT, SC-CoT, ToT, GoT, BoC, and long-CoT across ten LLMs on five text classification datasets. Beyond traditional metrics such as accuracy and macro-F1, we introduce two cost-aware evaluation metrics that quantify the performance gain per reasoning token and the efficiency of performance improvement relative to token cost growth. Experimental results reveal three notable findings: (1) Reasoning does not universally improve classification performance: while moderate strategies such as CoT and SC-CoT yield consistent but limited gains (typically +1% to +3% on big models), more complex methods (e.g., ToT and GoT) often fail to outperform simpler baselines and can even degrade performance, especially on small models; (2) Reasoning is often inefficient: many reasoning strategies increase token consumption by 10$\times$ to 100$\times$ (e.g., SC-CoT and ToT) while providing only marginal performance improvements.

Tasks such as customs tariff classification, export control categorization, and standards-based equipment coding require assigning an input instance to a fine-grained class under an explicit regulatory hierarchy. Unlike standard text classification, the correct label in these tasks is not determined by semantic similarity alone, but by rule-defined boundaries, threshold conditions, exclusion clauses, definitions, and local exceptions. As a result, two highly similar inputs may require different labels, while a retrieved passage that appears relevant may still be inapplicable under the governing rules. Existing flat classifiers, hierarchical text classification methods, and retrieval-augmented LLM systems are not designed to jointly enforce hierarchical validity, rule consistency, and fine-grained boundary reasoning. In this paper, we formulate this setting as regulation-driven fine-grained hierarchical classification, where an external instance must be assigned to a fine-grained class through a valid path in a regulatory hierarchy and supported by auditable evidence. We construct four benchmark datasets from representative regulation-intensive scenarios and validate the annotations through an expert-in-the-loop process. We further propose a constraint-aware hierarchical search framework that converts regulatory documents into a searchable tree, retrieves only valid local candidate nodes, and uses structured regulatory fields with evidence snippets to guide each next-hop decision. Experiments show that our method achieves the best mean accuracy on all four datasets and provides interpretable decision paths, with the largest gains on cases involving fine-grained neighboring categories and rule-based boundary conditions.